ADP Offers Disappointing Read On Hobbled US Labor Market

ADP Offers Disappointing Read On Hobbled US Labor Market

Private US firms added 117,000 jobs in February, ADP said Wednesday. I suppose this goes without saying, but relying on ADP as a "predictor" of the government's monthly jobs report hasn't been the best strategy over the course of the pandemic. January was yet another example. So, these prints now come stamped with a caveat. "Grains of salt" and so forth. Versus consensus, 117,000 was a miss, and a fairly large one at that. The market was looking for 200,000. January was revised higher. (The sc
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2 thoughts on “ADP Offers Disappointing Read On Hobbled US Labor Market

  1. Re: Hobbled US Labor Market & grains of salt

    In a somewhat related larger labor market macro picture, I ran across an interesting salt crystal, i.e., home prices in Japan are sort of falling — which connects to GDP-debt ratios, growth, productivity and labor trends related to demographics.

    That’s even more interesting in terms of interest rates and jawboning the threat of hyper-inflation, as a global kneejerk reaction to pandemic stimulus, because, GDP has been stagnate for decades, as has labor market, wages, productivity, etc.

    Perhaps a great re-structuring is under way, as technology trends have blasted some productivity higher, but the over labor market is still very much threatened by a surge in AI robotic growth, which will displace human job potential. Add on top of that, a drop in fertility rates, connected to the super peak period of Baby Boomer labor market drop-outs and we essentially have a very combustible future, after the great pandemic.

    Although animal spirits may phase in as the pandemic phases out, that transition will be dramatically short, because sluggish growth will continue from the prior trend, then be accelerated by robotic efficiency and less spending from Boomers. This period today is a singularity — and I totally agree that ADP data is highly suspect.

    Also see more suspect and highly distorted labor data: FRED has added 118 new series from Indeed, which calculates trends in job postings on Indeed.

    FRED does have a good post, called — U.S. Population Growth Slowed Further in 2020 (here’s the conclusion):

    “This year’s 0.35% growth rate reported in December 2020 was only about half of the 0.72% growth expected by the Census Bureau in April 2020, as seen in the figure below. The final estimate could rise above 0.35% as the decennial census and other field work is completed.

    This matters for the economy because the potential labor force will grow more slowly in the future. This, in turn, may lower investment demand and interest rates, because there will be less need for new business equipment, housing and other capital goods to accommodate a slow-growing population and workforce.”

    And, here’s an idea for a FRED chart:

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