Were Payrolls in May Really as Bad as ADP Claimed?

TrimTabs Investment Research projected that the U.S. economy added 229,000 jobs in May. This is down from 242,000 new jobs in April, but it is far better than the mere 179,000 from ADP. One thing that truly stood out in the ADP report is that large businesses were a serious lag.

Now we have to consider that ADP may serve more small and mid-sized businesses compared to large businesses. Those large companies have their own human resources departments more frequently than small businesses.

If you go back to the TrimTabs report, the quote from CEO David Santschi is more positive:

The labor market has been gradually improving early this year. Employment growth has exceeded 200,000 jobs for three consecutive months for the first time since the spring of 2011.

The other thing to consider is that ADP is a measurement solely of the ADP client universe. The payrolls projection from TrimTabs is based on analysis of daily income tax deposits to the U.S. Treasury from the paychecks of the 138 million U.S. workers subject to withholding. So, did ADP miss the mark?

Bloomberg is calling for May’s unemployment report (due Friday) to rise 0.1% to 6.4% and for nonfarm payrolls to be about 213,000 (up from 288,000 previously). The estimate for private sector payrolls is 215,000.

On a side note, TrimTabs reported that wage and salary income increased 3.2% year-over-year in real terms in May. This is versus 3.4% in April. The CEO’s warning was also that inflation was on the rise, but that is another matter entirely.

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