Ruh-roh!
The US private sector lost 32,000 jobs on net in September, according to the only payrolls update traders are likely to see this week.
The government shutdown’s unlikely to be resolved in time for the BLS to release the monthly jobs report on Friday. So ADP, which was already gaining clout in light of myriad concerns around the reliability of the government’s hiring tally, will be the US labor market benchmark until further notice.
Wednesday’s ADP release incorporated the preliminary run at the payroll processor’s own annual QCEW re-benchmarking exercise. The release noted that the process “resulted in a reduction of 43,000 jobs in September compared to pre-benchmarked data.” The trend, the accompanying color went on, “was unchanged” in showing a demonstrable loss of job creation momentum “across most sectors.”
The 32,000 decline on the headline was the second-largest since June of 2020, and only the third negative print in five years. Oh, wait! Fourth. September’s headline was the fourth negative print since July of 2020, because Wednesday’s data revised away August’s gain entirely. Now, August shows a 3,000-job loss.
So, ADP hiring has contracted for two consecutive months now, and three in four. The three-month average is a paltry 23,000. Note that consensus was looking for a 50,000 gain for September.
The breakdown shows that only the largest businesses (those with 500 or more employees) created jobs in September. By category, only education and health services added a meaningful number of employees.
This release suggests the contrast between the labor market and other key US macro aggregates grew even starker in September. Last week’s macro data, you’ll recall, was quite upbeat and Q3 GDP’s tracking very strong. But… well, suffice to say it’ll be difficult for a consumption-dependent economy to sustain momentum if consumers lose their jobs.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market — that US employers have been cautious with hiring,” ADP chief economist Nela Richardson said Wednesday.
The data comes on the heels of a JOLTS release which likewise nodded to additional labor market softening and a ninth straight deterioration in household perceptions of job availability in the Conference Board’s monthly confidence survey. Note that ADP’s “pay insights” series showed an outsized drop in pay growth for so-called “job switchers” in September.
All in all, the ADP release was bad news, and as BMO’s Ian Lyngen wrote Wednesday, “the private hiring data could potentially stand in place for NFP for weeks to come and this is to say nothing of the BLS data quality concerns that are already present in the market and will likely be raised because of the shutdown.”
So, ADP’s all we have until further notice, it was anyway becoming the gold standard and it now suggests the US economy lost jobs on net in three of the last four months.
Sign of the times, the political economic landscape is so unsettled that every self respecting CEO is going to add a significant dose of caution to every decision. Most of us are hoping for the unhinged craziness to shake out, instead it’s amping up. At some point I was telling myself ‘Trump has done his worst’. What a fool I was. If yesterday’s shit show with the Top Brass is any indication, we’ve got a lot farther to fall. We had a decent plane on January 19, now half the instruments are gone, the navigator has been fired and the jet fuel has been watered down with piss.
Public sector (Federal and state/local) employment is also falling. OMB will probably try to steepen that decline during the shutdown.
Indeed per Bloomberg “White House Budget Director Russell Vought is planning to swiftly dismiss federal workers”. The Republicans seem to think this will play well with voters. I think voters blame whoever is in power.
Yeah, but for the hundredth time: The midterms aren’t going to meet any conventional definition of “free and fair.” This is on the way to becoming a competitive autocracy, which is to say yes the GOP will still lose seats occasionally and maybe even the majority in one chamber, but how a given turn of events “plays” with the marginal voter is much less important now than it was previously. He ain’t goin,’ anywhere, folks. In case that’s still somehow unclear. And because a Democrat majority in both chambers would impede his capacity to consolidate power, that ain’t gonna happen either. More broadly, the worry here is that once a nation goes this route, it’s not a quick snapback. It’s not as if once Trump gives up office (if he ever does), things will just go back to normal. Everyone knows what’s possible now. The entire game’s changed. Look at the competitive, almost real-time, tit-for-tat redistricting. That’s a window into the country’s future. No one cares about democracy anymore — it’s just about finding ways to manipulate the scaffolding to win, even if the result bears no resemblance to representative government.