ADP: Continued Gains, Details More Mixed

Bottom Line:   ADP reported continued job gains in September, mostly as expected, and the payroll company revised August's gains higher. Looking through the normal monthly volatile and some difficult seasonal adjustments in August and September, we see a slower trend rate of job gains. The last three months averaged 220k, notably lower than the six- and 12-month averages of 309k and 350k. Moreover, September's gains were almost entirely driven by a 147k new jobs in the trade, transportation, and utility sector. While this sector is the largest of ADP's segments, the gains look anomalous relative to the history of this segment, which usually sees gains in the 35-50k per month range. There were also job losses in the critical manufacturing sector, as well as in construction. Overall, job gains continue but are slowing, likely running at a new trend rate of a bit less than 200k per month for ADP. While on the headline this report suggests the 263k consensus for Friday's national payroll data looks about right, the details of the ADP report leave us seeing modest downside risk.