Employment Growth Stalls in May: ADP Report Could Point to Non-Farm Payroll Weakness

by: The Fundamental Analyst


The latest ADP employment report showed private payrolls added just 38,000 jobs in May. That contrasts with an average of slightly over 200,000 per month for the previous 5 months (click to enlarge images):

This is not particularly surprising given the rise in initial jobless claims in the last 6 weeks pushing the 4 week moving average close to 440,000, a level usually associated with tepid employment growth at best.

On a month to month basis the ADP report and the non-farm payroll report can sometimes differ substantially, however there is generally a high level of correlation between the two reports. A weaker than consensus forecast for NFP’s on Friday could well be in the cards.