The monthly ADP report on private-sector employment gives analysts a big indicator on the next Department of Labor report on employment — and if so, batten down the hatches. The payroll-data giant estimates a growth of only 13,000 jobs in the private sector, down from last month’s 57K and far below expectations:
Payrolls processor ADP said Wednesday that hiring by private companies climbed slightly in June, with a paltry 13,000 jobs added during the month, compared with a revised gain of 57,000 jobs in May.
The amount was lower than expected. A survey of economists surveyed by Reuters for the ADP EmployerServices report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 60,000 private-sector jobs in June.
The report, released at 8:15 a.m. ET, is often seen as a precursor to the Labor Department’s big monthly jobs report, which is due out Friday morning. ADP’s data only includes jobs created by private companies so it can vary widely from the Labor Department data, which also includes government jobs.
Friday’s report is expected to show employers cut a total of 110,000 jobs in June. However, the net loss of jobs is tied primarily to the government laying off temporary workers that were hired to work on the 2010 census.
The numbers fall short of even May’s disappointing figures, when the DoL survey showed an expansion of 431,000 jobs — but only 41,000 of them in the private sector. This shows that whatever momentum the Obama administration had in improving the jobless rate has dissipated. It appears certain that the number on Friday will go negative, with a net loss of jobs probably into six figures.
This should surprise no one. The numbers of initial jobless claims has remained constant all year long (the next report will come tomorrow), which indicates a stagnant job creation environment. In the last two years, we have only had one month of private-sector job growth above population expansion, in March, which underscores the difficulty in catching back up to the near-full employment the US had before the current recession and recovery.
But is this a recovery at all? CNN Money editor Paul LaMonica argues that it’s a barbecue recovery — low and slow:
But first and foremost, continued signs of sluggish job growth and weak demand for housing in the U.S. show that the rebound from the Great Recession is not going to be sharp and fast like a letter V.
It will more likely be, as I like to refer to it, the barbecue recovery. Low and slow. The low refers to subpar rates of growth and the slow indicates that a recovery is probably going to unfold over a long period of time.
Should we really be surprised though? It definitely seemed before the markets started to tank in May on fears about Europe that the run-up in stocks from March 2009 was a little excessive. Investors were starting to believe this fantasy, that it would take only a year or so to fully recover from the Great Recession.
LaMonica argues that the fantasy was unsustainable because of the years that went into feeding the credit and housing bubble and in the stock markets. However, that’s not the real problem with the recovery. The real problem is the future, not the past, and investors fear the future. They see a government gorging on debt and spending, and that high taxes and capital seizure is the most likely endgame for it. Instead of pro-growth policies, the agenda in Washington intends on government encroachment on the private sector.
Maybe we should call it the bruschetta recovery, because right now it looks as though we’re toast.