Goldman Sachs has kept its July nonfarm payroll forecast at 75,000 after the latest ADP private employment report came in below market expectations. The investment bank said the ADP shortfall does not materially alter its outlook because the ADP series has shown limited real-time correlation with Bureau of Labor Statistics private payrolls in recent years.
The ADP report put private-sector employment growth for July at a seasonally adjusted 44,000. Within the private sector, the services side added 47,000 jobs, with education and health services accounting for a 36,000 gain. Leisure and hospitality employment fell by 11,000.
On the goods-producing side of the economy, ADP reported a net decline of 3,000 jobs in July, a figure driven largely by a 6,000 drop in natural resources employment.
Pay dynamics in the ADP data showed median annual pay for employees who stayed in their roles rose 4.4% year-over-year in July, matching the pace recorded in June. For workers who changed jobs, pay increased by 7.0% year-over-year, a 0.2 percentage point uptick from the prior month.
Goldman Sachs' maintained call of 75,000 remains below the consensus expectation of 80,000 ahead of the Bureau of Labor Statistics' official employment report, scheduled for release on Friday. The firm reiterated that the ADP report's shortfall is not given substantial weight in its forecasting process because of the historically limited correlation between ADP's real-time figures and BLS private payroll outcomes.
The divergence between the ADP private payrolls figure and Goldman Sachs' forecast highlights ongoing uncertainty in the run-up to the official government employment numbers. Market participants will be watching the BLS release to reconcile the differing signals from private payroll tallies and institutional forecasts.
Contextual note: The ADP figures cited above are seasonally adjusted and reflect the private-sector employment components reported by ADP for July.