ADP: 227K New Jobs, Plus Q3 Earnings: GM, K & More

Wednesday, October 31, 2018

Private-sector payrolls for October have been released on this last day of the month from payroll giant Automatic Data Processing ADP, with more good news from both the private sector and looking toward Friday’s government-issued jobs data: 227K new jobs recorded by ADP in the month is up from the downwardly revised September tally of 218K, but marks the 7th quarter in the last 12 months of 200K+ jobs gains.

The breakdown between Goods (38K) and Services (189K) looks much the same that it has been for the past year or more, with Goods-producing jobs higher than they had been in previous years — somewhat of a hallmark of the “Trump economy” so far. Breaking down these figures by company size, Large companies (>500 employees) came out ahead with 102K new jobs in the month, with Small companies (<50 employees) bringing up the rear and Medium companies making up the balance.

Also as per usual, Trade and Transportation brought in the most jobs at 61K, Leisure/Hospitality 40K, Education/Healthcare 31K and both Construction and Manufacturing performing solidly once again with 17K new jobs each. We see virtually no ill effects from last month’s Hurricane Matthew, which ripped through the Florida panhandle and into Georgia and other inland states, likely because temporary lack of work hours do not show up in this report, which tracks just payroll numbers.

So while the labor market continues its robust performance, today’s ADP numbers throw a bit of cold water on investors who may have been looking for a loosening of Fed resolve to raise interest rates at its December meeting this year. We’ll see on Friday additional metrics updated, including the Unemployment Rate and wage growth. Should headline numbers come somewhat in line with today’s and wage growth continue apace with what we’ve seen over the past few months, expect the Fed’s resolve to be as firm as ever.

Speaking of ADP, the Zacks Rank #2 (Buy)-rated company also produced quarterly earnings results, with $1.20 per share beating the Zacks consensus by a solid dime. Revenues reached $3.32 billion, a 1.24% positive surprise and a notable improvement from the year-ago quarter. Shares had already been up 17% year to date, and are trading north another 2.3% in today’s pre-market. For more on ADP’s earnings, click here.

General Motors GM impressed investors ahead of today’s opening bell, posting $1.87 per share — 40%+ higher than the Zacks consensus. Sales of $35.8 billion topped the $34.2 billion analysts had been expecting, and up more than 6% year over year. Full-size truck sales performed robustly in the quarter, and GM delivered 70K new autos in the quarter just in the U.S. Shares are still down from where they began calendar 2018, but are trading up 7.5% in early markets this morning. For more on GM’s earnings, click here.

However, Consumer Discretionary major Kellogg Co. K missed earnings estimates by a penny to $1.06 per share, and only up a penny from the year-ago quarter earnings. The breakfast food giant posted $3.47 billion in revenues, which did surpass analyst expectations by 1.5% and were up $200K from its year-ago numbers. So while strong Consumer sentiment may have assisted the company’s top line in the quarter, but the bottom-line miss has sent the shares down 6% this morning, wiping out Kellogg’s gains for 2018 thus far. For more on K’s earnings, click here.

Mark Vickery
Senior Editor

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