ADP employment report
The ADP national employment report (or NER) showed that the private sector added 201,000 jobs in May 2015. These additions were the first above the 200,000 level in three months. However, private job additions for April were downwardly revised to show an increase of just 165,000 from the 169,000 reported earlier.
The NER showed that, per company size, small-sized businesses (1-49 employees) added 122,000 jobs in May, the most jobs among businesses, compared to an upwardly revised 97,000 additions in April. Mid-sized businesses (50-499 employees) followed with an addition of 65,000 jobs. In the previous month, these businesses had added a downwardly revised 65,000 jobs. Large businesses (500+ employees) added just 13,000 jobs, up from 3,000 jobs added in April.
Service-providing companies were responsible for adding 95.5% of the total jobs in May. Goods-producing companies added the remaining 9,000 jobs.
According to ADP’s industry classification, trade, transportation, and utilities added 56,000 jobs in May, followed by professional and business services with 28,000 jobs in the month.
Why did the manufacturing sector lose jobs?
The manufacturing industry actually lost 5,000 jobs in May, due in part to the following factors:
- low energy prices, which have affected orders from energy companies
- a strong US dollar (UUP), which has affected the competitiveness of US goods
Impact of the report
Like the non-farm payrolls report, the ADP national employment report also affects industrials-related ETFs like the SPDR Industrial Select Sector Fund (XLI) and the First Trust Industrials AlphaDEX Fund (FXR). Materials and home-related ETFs like the SPDR Materials Select Sector Fund (XLB) and the iShares Dow Jones US Home Construction Index Fund (ITB) and large-cap ETFs (SPY) (DIA) (IVV) also watch out for the report. XLB has DuPont (DD), Monsanto (MON), and Dow Chemical (DOW) as its top three holdings, which together comprise ~30% of its portfolio.