Analysts expected a 7th straight month of ‘solid’ employment gains in July, forecasting ADP to show the US economy added 683k jobs (despite recent weakness in ISM Employment data). They were wrong, very wrong!
ADP printed a miserly addition of just 330k jobs in June (less than half the expected rise)… and well below the consensus forecast for Friday’s payrolls print.
Source: Bloomberg
That is the weakest addition since February.
“The labor market recovery continues to exhibit uneven progress, but progress nonetheless. July payroll data reports a marked slowdown from the second quarter pace in jobs growth,” said Nela Richardson, chief economist, ADP.
“For the fifth straight month the leisure and hospitality sector is the fastest growing industry, though gains have softened. The slowdown in the recovery has also impacted companies of all sizes. Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new COVID-19 concerns tied to viral variants. These barriers should ebb in coming months, with stronger monthly gains ahead as a result.”
Medium-sized businesses added the most jobs…
The Services economy continues to dominate the recovered jobs in June, with only 12k manufacturing jobs added.
Source: Bloomberg
Job additions were primarily in teachers and waiters…
Finally, we note that ADP has under-guessed Nonfarm Payrolls in 4 of the last 6 months, and remember that Fed Governor Christopher Waller on Monday said the U.S. central bank could start to reduce its support for the economy by October if the next two monthly jobs reports show employment rising by 800,000 to 1 million, as he expects, adding that there’s “no reason” to go slow on tapering the Fed’s bond purchase program.
So if today’s ADP print is anything to go by – the taper is off!
