ADP Jobs Number 177K, Suggests Smooth Sailing

Wednesday, May 3rd, 2017

Ahead of today’s market open, Automatic Data Processing (NASDAQ:ADP) , the premier private-sector employment survey reporter, showed a gain of 177K new non-government jobs in the month of April. This was slightly above the 175K expected by analysts, although the March numbers were revised downward by 8K to 255K. This is a “steady as she goes” number, suggesting low volatility in the U.S. labor market which came into question directly following the March government jobs report.

Last month, you’ll recall, this government report from the Bureau of Labor Statistics (BLS) showed a paltry 97K new jobs in the U.S. for the month of March. This was way off the 263K number originally reported by ADP earlier that same week, which left observers scratching their heads. But Moody’s Analytics Chief Economist Mark Zandi, whose team was instrumental in bringing forth the ADP report, suggested there is no reason to fear the U.S. labor market.

“Bad weather affected the March BLS numbers,” Zandi told CNBC’s Steve Liesman in an interview this morning on Squawk Box, which accounted for the puzzlingly low BLS numbers. Zandi went on to suggest the weak GDP figure from last Friday — eliciting much of the same worry the weak BLS jobs number did — has measurement issues that bias its figures lower, not accounting for economic activity that doesn’t immediately come out in jobs numbers. In other words, don’t worry — this is not the beginning of a fallout in the U.S. economy.

We’ll see on Friday, of course, what the April non-farm payroll totals are, as well as a likely revision to the March headline number. Estimates are much the same as a month ago at 188K, with the Services sector still far outweighing the Goods producers. As far as today’s ADP breakdown shows, the top job creators last month were in Professional/Business Services, Education/Healthcare, Leisure/Hospitality, with Construction jobs in the negative after warmer winter months pulled some of that sector’s productivity to earlier in the year.

Medium-sized and small businesses made up more than two-thirds of the new jobs created, compared with large (+500 employees) businesses. Services brought in 165K jobs while Goods only brought 12K. If the labor market does seem to have any issues, they look to be the same as they had been: a tighter hiring environment due to fewer skilled workers available and technology taking out employment elsewhere. But these are gradual developments, not sudden jolts to the system.

Q1 Earnings Barrage Continues

We await quarterly results from Facebook (NASDAQ:FB) and Tesla (NASDAQ:TSLA) after the closing bell, but here’s a quick run-down of some of the companies that have reported already this morning, including the aforementioned ADP:

ADP beat the Zacks consensus estimate for earnings but missed on revenues: $1.29 per share topped the $1.23 expected, though quarterly sales of $3.41 billion was slightly below what analysts were looking for. For more, click here.

Healthcare provider Humana (NYSE:HUM) had a similar result: earnings beat the Zacks estimate by 20 cents to $2.75 per share, but the $13.48 billion in revenues brought in for the quarter missed our $13.61 billion estimate. For more, click here.

Consumer products leader Clorox (NYSE:CLX) topped bottom-line estimates by a penny to $1.31 per share. Revenues were just a tad shy of estimates: $1.477 billion from the $1.479 billion expected. For more, click here.

Media conglomerate Time Warner (NYSE:TWX) managed to beat both earnings and sales estimates for its Q1: $1.66 per share was an easy beat over the Zacks consensus of $1.44, whereas $7.74 billion in revenues was better than the $7.66 billion expected. For more, click here.

Finally, quick-service restaurant giant Yum! Brands (NYSE:YUM) also topped estimates on both top and bottom lines, reporting earnings of $1.65 per share (a 5-cent beat) on sales of $1.42 billion, solidly beating the $1.35 billion our consensus was expecting. For more, click here.

Mark Vickery
Senior Editor

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Time Warner Inc. (TWX): Free Stock Analysis Report

Facebook, Inc. (FB): Free Stock Analysis Report

Tesla Inc. (TSLA): Free Stock Analysis Report

Humana Inc. (HUM): Free Stock Analysis Report

Yum! Brands, Inc. (YUM): Free Stock Analysis Report

Clorox Company (The) (CLX): Free Stock Analysis Report

Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report

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