ADP: August Jobs Market Better than July, but Declines Continue
In August, private employment across the nation declined at its slowest rate since September 2008, according to the ADP employment report, which tracks actual payrolls from businesses.
The report found that 298,000 private jobs were lost in the month. While not quite matching expectations for a fall of 245,000 jobs, the report suggests that the labor market improved compared to July, when 360k jobs vanished from the economy.
“Employment losses are clearly diminishing,” the report said, followed by this caveat: “Despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is still likely to decline for at least several more months.”
Markets continue to be indifferent to fresh data, as equity futures and bonds were little moved following the release. Yesterday, the S&P 500 dropped 2.2% despite three positive reports from different areas of the economy.
Jobs losses in the ADP survey were pretty evenly divided between the service sector (-146k) and the manufacturing belt (-152k). Looking at company size, small- and medium-sized businesses were hit the hardest.
Businesses with 500+ workers lost 60,000 drop in the month, compared with 116,000 lost jobs amongst medium-size businesses (50 to 499 workers), and 122,000 lost jobs among small businesses (less than 50 workers).
“The ADP employment data continue to suggest that net job losses are slowing but that we are still some way from the point where the labor market will begin to create jobs,” noted analysts from RDQ.
This Friday’s official tally from the Bureau of Labor Statistics is expected to show that 200,000 jobs, private and public, were lost in August. With the ADP report improving from last month but failing to meet market expectations, forecasts are unlikely to change much, if at all, as the ADP survey has had a shaky forecasting record over the past 18 months.
“From an accounting perspective this ADP report mathematically implies a nonfarm payrolls number of -278K, larger than the market expectations for a print of -225K,” said Ian Pollick from TD Securities. “However, the ADP has had a checkered history and we are only revising our payrolls forecast down from -175K to -200K as a consequence.”
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