ADP Signals Biggest Monthly Job Loss Since 2020 COVID Lockdowns

Ahead of Friday’s much-narrative-managed payrolls print, ADP’s employment report gives us the first glimpse – outside of the ugly ISM/PMI jobs sub-indices – at just how bad things could get.

Everyone from talking heads, banks, The White House, and The Fed has front-run the potentially negative print, as we note that almost half of analysts’ expectations are for a drop in employment in January.

Source: Bloomberg

So, after December’s big surprise surge in employment (+807k) led by a jump in Services jobs (which was very much absent in the payrolls data for that month), expectations were for ADP to print a considerably lower +180k for January… but as we suspected it was a huge miss with ADP printing a terrible 301k drop in jobs…

Source: Bloomberg

“The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth,” said Nela Richardson, chief economist, ADP.

The Services sector lost 274k jobs in January and Goods-Producing jobs fell 27k…


The majority of industry sectors experienced job loss, marking the most recent decline since December 2020. Leisure and hospitality saw the largest setback after substantial gains in fourth quarter 2021, while small businesses were hit hardest by losses, erasing most of the job gains made in December 2021.

This bodes poorly for Friday but as several Fed Speakers have already noted, this is ‘transitory’ is unlikely to affect their decision to hike rates asap.

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