US Slowdown Takes Shape As Hiring Downshifts, Jobless Claims Rise
Private employers in the US added 150,000 jobs last month, ADP said Wednesday.
That was fewer than consensus expected. So, a "miss." Relative to the collective wisdom of people who're almost never right. As a helpful reminder: Data doesn't "miss." Data's just data. Economists "miss." We have this backwards.
I digress. June's headline took the three-month moving average down to 165,000. That's the slowest three-month average pace since February.
As the figure shows, job growth's decelerating
Thanks for the nod to your readers… 🙂
Given the importance of tech to the markets, I don’t know whether to fret over the job losses in IT (weak terminal demand outside of AI?) or be “satisfied” (as an investor, less workforce means better margins, right?)…
I remind myself that “soft landing” and rate cuts require that inflation and the economy both slow down.
A downshift in the labor market is exactly what we need . . . sorry, “we” referring to investors and the Federal Reserve, not to unemployed persons.
Looking at UE, initial claims, JOLTS ratios, etc it looks like the post-pandemic “normalization” of the labor market is mostly complete, in that those and other metrics now look roughly like 2019 levels.
In fact, a lot of economic metrics are looking more and more like 2019 – real GDP growth YOY, S&P 500 revenue growth YOY and operating margin, etc.
What is not looking like 2019? The financial markets.
S&P 500 P/E NTM (>21X now vs 16X-ish then), 10Y Treasury yield (4.36% now vs 2.0-2.7% then. Hmm, stocks are much more expensive and treasury yields are much higher . . . that doesn’t seem great.
Granted, what also doesn’t look like 2019 is S&P 500 EPS growth (+MSD% now and consensus sees it accelerating to +HSD/LDD% vs slowing from +HT% to +LSD% then).
We really need to see 2Q earnings beat and raise. Beat and raise is always preferred, but sometime the market doesn’t absolutely need it and now it really does.
+1.
Nice post again, John.