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Automatic Data sees new business bookings fall, lowers growth outlook

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Automatic Data sees new business bookings fall, lowers growth outlook

Automatic Data Processing Inc. saw its new business bookings decline in the second fiscal quarter, partly because clients delayed decision making amid political uncertainty, executives said during an earnings conference call.

New business bookings fell 5% compared to the prior-year quarter. President and CEO Carlos Rodriguez said the slowdown, most notable in mid-market and upmarket companies, is in part related to political uncertainty surrounding the U.S. presidential election, which prompted a stall in buyer decision-making.

The post-election bookings pressure came from the "wait-and-see attitude" of some companies focused on the administration's discussion of repealing and replacing the Affordable Care Act, Rodriguez added. President Donald Trump signed an executive order targeting the Affordable Care Act soon after he took office.

Rodriguez pointed out that it is hard to measure the hesitancy of companies waiting for ACA-related clarity or resolution of other potential policy changes. He said ADP typically performs well when there is change in the external environment, but not when there is uncertainty about those changes.

But Rodriguez said current conditions and client hesitancy will be a "short-term phenomenon." While the company expects new business bookings growth to pick up in the second half of the fiscal year, management revised the fiscal 2017 new business booking outlook to flat, compared to a previous forecast of 4% to 6% growth.

"In the meantime, we're going to rely on our historical track record of being able to navigate through these uncertain times and wait for the inevitable pickup in the economic activity as well as government activity around some of these changes," Rodriguez added.