ADP: Seasonals Mask Solid Gains

Bottom Line:   ADP reported lower-than-expected hiring in August, but there were positive revisions to prior data, which had already surprised expectations four months running. This report has had a waning correlation with nonfarm payrolls in the national employment report (due Friday and expecting 170k). Moreover, the seasonal adjustments for August look to have been difficult. Jobs in the education and health services sector jumped, likely impacted by earlier school start dates that are not yet reflected in seasonal factors. Similarly, there was a sharp drop in leisure and hospitality hiring that also appeared to be influenced by misguided seasonal factors.  Looking beyond the seasonal volatility, the trend in ADP data shows a labor market that is still growing moderately with only hints of cooling.