The ADP jobs report is out, and it's a miss.
US companies added only 135,000 jobs in May, which was well below the 165,000 expected by economists.
The April measure was also revised down to +113,000 from a prior reading of +119,000.
"Notably, a gain of 5,000 jobs in the construction industry during May was offset by a decline of 6,000 lost jobs in the manufacturing industry," said ADP's Carlos Rodriguez.
Here's a break down by company size:
- Small (1-49 employees): +58,000
- Medium (50-499 employees): +39,000
- Large (500+): +39,000
This is the first of the major May labor market indicators building up to this Friday's official jobs report published by the Bureau of Labor Statistics.
"In the short term, the monthly ADP survey, which we get this morning, is the single best predictor of changes in payrolls," said Deutsche Bank's Joe LaVorgna.
The "odds of a strong report on Friday have just gone down considerably," said economist Ian Shepherdson.
Here's what LaVorgna and Shepherdson talking about (chart via ADP):
"Private payrolls rose 57K more than the ADP estimate last month; misses have averaged 42K since Moody’s became the compiler of the data," said High Frequency Economics Jim O'Sullivan addressing the relationship between the BLS and ADP reports.
Here's a historical chart from ADP:
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