ADP Private Payrolls Friday Could Show the First Job Loss Print in Three Years

ADP Research Institute releases its April private payroll report Friday May 1 at 8:15am Eastern. Consensus from Bloomberg sits at plus 28,000 jobs, the lowest expected reading since June 2023. The March print came in at plus 49,000, well below the trailing twelve month average of 142,000. Goldman Sachs and Citi are both modeling a negative print between minus 5,000 and minus 30,000. If either lands, it would be the first negative monthly ADP reading since the spring of 2020.

The release matters more than usual this cycle because Bureau of Labor Statistics nonfarm payrolls have been undergoing benchmark revisions that knocked roughly 818,000 jobs off the books for the year through March 2025. Economists have leaned on ADP and the Atlanta Fed wage tracker to confirm direction. ADP has missed BLS by an average of 65,000 jobs the last six months, but it has correctly called turning points in three of the last four cycles. Markets will be reading Friday for confirmation that the labor market actually rolled over in April.

Sector splits will tell most of the story. Manufacturing has shed jobs in five of the last six months per ADP, with March down 11,000. Stellantis idled the Toluca plant for fourteen days starting April 14 and Ford halted F-150 Lightning production at Rouge through May 12. Construction added 18,000 in March but the National Association of Home Builders sentiment index dropped to 38 in April, the lowest since November 2023. Leisure and hospitality has been the only consistent positive contributor, but Open Table data shows seated diners down 4.2 percent year over year in April.

Wage growth in the ADP report will draw extra attention. Job stayer pay growth was 4.6 percent in March, the lowest since August 2021. Job changer pay growth fell to 6.7 percent from a peak of 16.4 percent in mid 2022, narrowing the changer premium to 2.1 percentage points, the smallest gap since 2019. The Atlanta Fed wage tracker held at 4.0 percent in March, also the lowest in over three years. Federal Reserve officials have flagged wage growth as the cleanest read on services inflation pressure and a soft Friday print would cement market pricing of a June rate cut, currently at 64 percent per CME FedWatch.

Small business hiring has been the leading edge of the slowdown. ADP firms with 1 to 49 employees lost 9,000 jobs in March, down for three straight months. The NFIB hiring plans index dropped to a net 12 percent in March, down from 18 in January. The shift matters because small businesses generated 62 percent of net new jobs from 2021 through 2024 per JPMorganChase Institute. If small business hiring keeps deteriorating in April, the sample will pull the headline negative on its own.

Friday brings a second labor read at 10am Eastern when ISM Manufacturing employment posts inside the broader PMI report. The March employment subindex was 44.7, the lowest since the pandemic shutdown month of April 2020. Goldman published a client note this week pointing to 43 to 44 in April, citing tariff related order cancellations and the Stellantis idle. Two soft labor prints in two hours would push the two year Treasury below 3.50 percent for the first time in 2026 and likely shave 8 to 12 basis points off mortgage rates by Tuesday morning.

The Federal Open Market Committee held the funds rate at 3.50 to 3.75 percent yesterday in an 8 to 4 split, with Stephen Miran the lone dissenter for a 25 basis point cut. Chair Jerome Powell said in the press conference that the committee needs to see clearer evidence the labor market is softening before considering cuts. A negative ADP and a sub 49 ISM PMI on the same morning would meet that bar by his own framing. Bessent appearance at Senate Banking on May 7 will be the next inflation read after PCE drops Friday at 8:30am.

Equity markets have priced two and a half cuts by year end, up from one and a half a month ago. The S and P 500 sits at 7,138 after Tuesday weakness and consensus year end target is 7,400 from the same shop survey that called 6,800 in January. Energy and small caps outperformed during the late April risk on rotation but financials are flat year to date and pulling back this week on net interest margin pressure. A negative ADP print will likely accelerate the rotation into rate sensitive sectors, with utilities and homebuilders the cleanest beneficiaries.

The longer arc remains the bigger question for households. Quits rates have settled at 2.0 percent, the lowest since April 2020, meaning workers are staying put and accepting smaller raises. Hires rates fell to 3.4 percent, also at multi year lows. The labor market that defined the last four years, where bargaining power sat with the worker, has flipped. Friday provides the data point that decides whether the Fed responds in June or waits longer.