ROSELAND, N.J. - The private sector in the United States saw a modest increase in employment in August, with 99,000 jobs added, marking a continued cooling trend in job creation, according to the ADP National Employment Report released Thursday. The report, a collaboration between ADP Research and the Stanford Digital Economy Lab, also noted that annual pay rose by 4.8 percent compared to the same period last year.
The figures, derived from ADP's anonymized and aggregated payroll data, represent a diverse cross-section of the U.S. private-sector labor market and reflect the number of employees on ADP client payrolls. The data provides insights into the current state of employment and wage trends across different sectors and regions of the country.
In the breakdown by industry, goods-producing sectors added 27,000 positions, led by construction with 27,000 jobs, while manufacturing saw a decrease of 8,000 jobs. The service-providing sector accounted for the addition of 72,000 positions, with notable growth observed in education and health services at 29,000 jobs, and a decline in professional and business services, which shed 16,000 jobs.
Geographically, job changes varied across U.S. regions. The Northeast added 24,000 jobs, the South led with 55,000, the West contributed an increase of 20,000, and the Midwest saw the smallest gain with 7,000 jobs.
Further analysis revealed that medium-sized businesses, those with 50 to 499 employees, were the most robust in job creation, adding 68,000 positions. Large businesses, with over 500 employees, followed by contributing 42,000 jobs, while small businesses experienced a decline, losing 9,000 jobs.
Wage growth remained stable, with job-stayers seeing a median annual pay increase of 4.8 percent. Job-changers, on the other hand, experienced a higher median pay gain of 7.3 percent. The report also provided a detailed view of pay increases by industry sector and firm size.
The job market insights from the August report reflect a downward trend in hiring pace after two years of significant growth, according to ADP's chief economist, Nela Richardson. She highlighted that wage growth stabilization is the next indicator to watch following the post-pandemic slowdown.
The ADP National Employment Report is independently produced and distributed to offer valuable information on the U.S. labor market. The September 2024 report is scheduled for release on October 2, 2024. This analysis is based on a press release statement from ADP, Inc.
In other recent news, Automatic Data Processing Inc. (NASDAQ:ADP) has showcased strong financial results for the fourth quarter of fiscal year 2024, with a 6% revenue increase and substantial growth in adjusted earnings per share (EPS). The company's optimistic outlook for fiscal year 2025 anticipates continued growth across all segments. BofA Securities adjusted its price target for ADP shares to $276, maintaining a Neutral rating, reflecting a modest increase in market multiples applied to ADP.
The launch of ADP Assist and investments in next-gen technologies have played a significant role in bolstering ADP's performance and competitive positioning. For fiscal year 2025, ADP projects a 5-6% revenue growth in the employer services segment and a 4-6% increase in the PEO segment. The company's consolidated revenue outlook for the same period is set at 5-6% growth, with an adjusted EBIT margin expansion of 60 to 80 basis points.
The adjusted EPS growth is expected to range between 8% and 10%, supported by share buybacks. These recent developments indicate a promising future for ADP, according to the firm's valuation methods and expectations. The revised price target by BofA Securities offers investors insight into the firm's valuation methods and expectations for ADP's stock performance relative to the broader market.
InvestingPro Insights
The latest ADP National Employment Report indicates a cooling trend in the U.S. job market, with a modest increase in private sector employment. As investors consider the implications of these labor market trends on ADP's performance, several key metrics and insights from InvestingPro provide a more nuanced view of the company's current financial health and stock market position.
ADP, a prominent player in the Professional Services industry, is trading at a high P/E ratio of 30.04, suggesting that investors are willing to pay a premium for its earnings relative to near-term growth prospects. This is underscored by the fact that the company's stock is currently near its 52-week high, with a price percentage of 98.91% of that peak. Such valuation multiples could reflect market confidence in ADP's consistency and market position, despite analysts revising earnings downwards for the upcoming period.
InvestingPro Data reveals a revenue growth of 6.61% over the last twelve months as of Q4 2024, indicating a stable expansion in ADP's business operations. The company's dividend yield stands at 2.03%, with a notable dividend growth of 12.0% in the same period, showcasing its commitment to returning value to shareholders. This is further supported by ADP's track record of maintaining dividend payments for 51 consecutive years, a testament to its financial resilience and investor-friendly policies.
For readers interested in a deeper analysis, InvestingPro offers additional insights on ADP, including a total of 15 InvestingPro Tips, which can be accessed at https://www.investing.com/pro/ADP. These tips provide a comprehensive look at ADP's stock performance, valuation metrics, and more, equipping investors with valuable information to make informed decisions.
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