Jobs Data Is Roses As ADP Prints Near 1 Million, Claims Drop

US private employers added 978,000 jobs last month, ADP said Thursday, 24 hours ahead of May’s purportedly “crucial” NFP report.

The market expected 650,000 on the ADP headline, so the actual print represented a substantial beat.

Although ADP has proven to be a poor predictor during the pandemic era, the large upside surprise ostensibly boded well for the government report. May’s gain was the largest since the two-month surge following the pandemic purge (figure below).

All eyes are on the services sector, for obvious reasons. The extent to which the labor market can coax front-line workers off the sidelines is the key to the recovery.

On that front, ADP said the services sector added 850,000 jobs during the May survey period. That’s a blockbuster. 440,000 of those were in leisure and hospitality (figure below).

In the goods-producing sector, gains were healthy too. Construction and manufacturing added 65,000 and 52,000 jobs, respectively, while mining chipped in 11,000.

Gains were uniform — evenly spread across small, mid-sized and large businesses (figure below).

“Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery,” ADP Chief Economist, Nela Richardson, said. “While goods producers grew at a steady pace, it is service providers that accounted for the lion’s share of the gains, far outpacing the monthly average in the last six months.”

Again, that’s good news for an economy that depends heavily (and that’s a laughable understatement) on its services sector.

Meanwhile, just 385,000 Americans filed for unemployment benefits last week, inline with estimates and easily the lowest of the pandemic era (figure below).

The four-week moving average fell to 428,000.

Continuing claims for the week of May 22 were 3.771 million, slightly higher than consensus, but that “miss” will invariably be overshadowed by the headline initial claims print. And rightfully so. It was the seventh decline in eight weeks (figure below).

Initial Pandemic Unemployment Assistance claims fell, while ongoing PUA and PEUC claims stood at 6,368,301 and 5,293,842, respectively, in the week through May 15.

It’s difficult to see Thursday’s data as anything other than a positive signal. Of course, it’ll be old news by this time Friday, when the market will know whether April’s downside NFP “shocker” was merely a pothole on the road to recouping the eight million jobs still MIA (versus pre-pandemic levels of employment) or a harbinger of challenging times ahead, as imbalances in the labor market make the achievement of “full employment” elusive.


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One thought on “Jobs Data Is Roses As ADP Prints Near 1 Million, Claims Drop

  1. You’ve hit the nail on the head if I understand correctly: the question is are we going to get back to the pre-pandemic employment level? All roads to inflation go through that point. I guess theoretically you could get stagflation, but I haven’t heard a detailed explanation how yet. If anybody knows I’d love to know what to be on the lookout for.

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