Private sector employers in the US added 122,000 jobs in July, ADP said Wednesday.
That was around 40,000 fewer than economists expected and the least since January.
June’s headline was revised slightly higher to show a 155,000 gain.
The three-month average for the ADP headline now stands at 145,000, a respectable pace to be sure, but the slowest in six months all the same.
If the miss is bad news, it’s probably bad news of “good” variety. The Fed’s still not convinced inflation’s on a sustainable path back to target, and slower job creation will give them more confidence in that regard. As long as any downshift in hiring doesn’t morph into actual layoffs, there are worse things in the world if you’re Jerome Powell than softer headline payrolls.
The ADP breakdown showed information and professional services shed 55,000 positions in July between them. That’s a sizable drop, and it stuck out. On the goods side, manufacturing lost 4,000 jobs. Gains were led by construction and trade.
The data came on the heels of a mixed JOLTS release and ahead of Friday’s crucial government data, which is expected to show steady hiring and an unchanged jobless rate.
ADP’s data on wage growth showed pay gains for so-called “job stayers” ran at 4.8% in July, the slowest in three years.
For job “switchers,” pay growth was 7.2%, the lowest in 38 months.
Bottom line: The ADP release, despite betraying a somewhat disconcerting drop in professional hiring, broadly suggested the labor market’s holding up and also that pay growth’s no longer a big concern.
“With wage growth abating, the labor market is playing along with the Fed’s effort to slow inflation,” ADP chief economist Nela Richardson said Wednesday. “If inflation goes back up, it won’t be because of labor.”
No one statistic at a point will give one the picture. But the mosaic is telling you the economy is slowing. The fomc needs to start the process of lowering rates. Last year a 5.35 funds rate matched a 5% core pce and rapid employment and wage growth. No core pce is 2.5%-3%, employment and wage gains are slowing. I don’t know if real rates should be 0% or 1% in fed funds target. But I am pretty confident they should not be 2-3% with a slowing economy. The fomc needs to get on with it and cut rates. Slowly for a soft landing and faster for an accelerating slowdown. Time to stop dithering. Exactly what are they going to see that will change their minds between now and september either way?
I disagree. This country operated quite successfully with real rates of 2.5%. To me that has to be the target. Zero is sheer madness.
Newbie question here: I don’t even understand why the present rates are a problem. They’re high compared to The 0% era, But extraordinarily low if you look at the last 80 or 100 years. The massive dotcom boom happened while the rate was mostly above 5%. Why was 5% low a generation ago and unsustainably high now?
Anybody still scratching their heads about why consumers are finally pushing back against rampant price increases for essentials?
Just as scary for the US economy is the level of credit card debt-last I checked it was broaching $1.2T. The average interest rate on existing cards is 21.5% and it is 23% on new cards. On top of that, the BNPL (BuyNowPayLater)loans are approximately $350B.
Citibank just notified all credit card holders that they will no longer allow BNPL balances to be rolled into a Chase credit card. Yikes.
It seems that between slightly worsening conditions with labor and credit cards; combined with insufficient improvements with food, gas, housing costs- we are headed for trouble. This seems plausible to me, until I go out into the real world and see the actual number of people shopping, eating out and traveling, which is a lot. I can’t reconcile this.
https://www.nytimes.com/2024/07/26/your-money/chase-pay-later-loans-credit-cards.html?smid=nytcore-ios-share&referringSource=articleShare&sgrp=c-cb