NEW YORK The pace of job creation by private employers slowed in January after a sharp gain the month before, a report by a payrolls processor showed on Wednesday.
THEODORE LITTLETON, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"The ADP Employment Report indicated that private employers added 170k to their payrolls in January, slightly missing the consensus forecast of a 185k gain. The December figure was revised down from +325k to +292k, but remains significantly higher than the initial BLS report of a 212k private payrolls gain. The miss being relatively minor and the relationship between ADP and BLS private payrolls being volatile, this print should not significantly affect forecasts for Friday. While this was the weakest ADP reading in three months, the extremely strong December reading was colored by a quirk in ADP's methodology that can cause large swings at the end of the year."
JOHN CANALLY, ECONOMIST/INVESTMENT STRATEGIST, LPL FINANCIAL, BOSTON
"The previous two months it has been well above consensus. With this month, we had a bit of disappointment. The ADP kind of says it's the right number for the Friday's payroll report. But the number is close enough that it may not matter to the market.
"There will be a lot of distortions in the January payroll report. But they have been well telegraphed so the market could be okay with it. Still people will be worried if the figure comes way below consensus. There is some feeling about a loss of momentum in January and early February. We have to wait and see what happens in the ISM report later.
"If you watch overnight lending rates in Europe, Italian bond yields are coming down. Swap rates are moving in the right direction. The European Central Bank has done a lot with liquidity. The fears that we will have another Lehman-type event from Europe have been greatly reduced."
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT
"This is right on the nonfarm payroll private job gain consensus...ADP has been overestimating the private NFP gain by 11,000 on a six-month moving average basis. The last two were well over that. Job gains were in small and medium-sized firms. The market's response is mixed, two-year (Treasuries) a tad weaker 5s-30s a tad firmer. No drama here and we wait for the more important ISM."
MARK LUSCHINI, CHIEF INVESTMENT STRATEGIST AT JANNEY MONTGOMERY SCOTT IN PHILADELPHIA
"Needless to say, ADP was a little below survey and a ways below where we were a month ago. But the market is bullishly higher given the strong data from China and Europe. ADP may have tempered some enthusiasm and set up some trepidation for what Friday's payroll report might hold. There is brinksmanship between the optimism and a reserved posture for the labor market."
ALEXANDER HODER, ECONOMIC ANALYST, FTN FINANCIAL, NEW YORK
"It's showing gains, but we have to see bigger numbers going forward for the unemployment rate to come down."
(Americas Economics and Markets Desk)