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Automatic Data Processing Releases Private Payroll Data

This morning’s main economic headline is the private sector payroll data from Automatic Data Processing ADP released before the opening bell today. The payroll services major reported 158K new jobs in the month of June, some 22,000 lower than expectations of 180K, but still within the range of 150K-200K new jobs per month we’ve seen since the U.S. economy finally gained traction out of the Great Recession roughly seven years ago.

In fact, much of this report looks straight out of the Obama Era: Services making up nearly all (in this case, 100%) of new jobs, while Goods producing again waned (unched in June). Trade and Transportation led the way with 30K new jobs, followed by Education/Healthcare at 28K, Leisure/Hospitality at 11K and Manufacturing +6K. Natural Resources/Mining lost 4K jobs in the month.

The ADP report always precedes the U.S. government Bureau of Labor Statistics (BLS), which currently expects a headline of 174K new jobs in June. Again, we’re looking at a strong jobs market without heavy inflation, which indicates that corporations, labor unions and other moving parts in the jobs-producing scenario remain cautious overall, not raising prices or demanding higher wages in a way analysts have been predicting for years, yet are still likely to manifest themselves at some point in the future.

This is why the Federal Reserve is only slowly normalizing interest rates, and may hold off on another increase for the rest of this year, although chances for another quarter-percent raise may occur in September or December, or both. It all depends on whether the U.S. economy can grow at the rate market participants have been hopeful for since the day after the surprise result of President Trump back in early November of last year.

Other Economic Indicators

Speaking of new data singing the same song for years, Initial Jobless Claims for last week remained within the 225K-250K range we’ve seen, more or less, for the past dozen or so quarters. But just barely, at 248K for the past week. This is 5000 claims higher than the consensus estimate. Also, Continuing Claims ratcheted up closer to the 2 million threshold we haven’t seen for months, to 1.956 million. So employment remains strong week-to-week, but has veered toward to higher (worse) range, which may be something worth keeping an eye on.

Tomorrow will be another key indicator, and next week brings the onset of Q2 earnings season, basically beginning with the big banks that report roughly a week from now. Although we are in the relatively low-volume summer months, market activity will still be locked into this data to a meaningful extent.  


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