It’s ADP, which hasn’t always been a reliable bellwether for the official BLS reports, but this is a big miss. After seeing massive new jobs created — or perhaps better understood, reestablished — in May and June, economists expected that trend to continue in June. The US economy had only made up less than half of the jobs it shed in the COVID-19 pandemic shutdown, and at least through the first part of the month, it appeared as though momentum remained for large chunks of that lost ground to be made up.
Instead, ADP reported pretty much a wash in July, far below the million-plus figure that economists projected:
Even in normal times, a month adding 167,000 jobs would be less than impressive. There is still plenty of debate about what rate is needed to keep up with population growth, but it’s usually considered to be around 120K-150K per month. With as many jobs lost in March and April as the economy saw, this result is a step backward — and a sign that employers have begun hunkering down.
CNBC lays it out pretty well here:
That total was well below the 1 million expected from economists surveyed by Dow Jones and represented a tumble from the 4.314 million created in June, according to the report, which is prepared in conjunction with Moody’s Analytics.
One bright spot was that the June total was revised sharply higher from the approximately 2.4 million in the initial estimate. However, that month, combined with May’s 3.34 million increase, still leaves the jobs market well short of the 19.7 million positions lost in March and April as the U.S. economy went into shutdown mode to stem the coronavirus pandemic.
Despite the big miss, the report had little market effect as futures indicated a higher open on Wall Street. The ADP tally and the government’s official count can differ widely, and jobs numbers during the pandemic have been volatile and subject to substantial revisions.
“It is worth reiterating that the ADP has never been a great guide to the official payrolls figures and has actually been particularly poor in recent months, with the ADP’s initially published estimates for May and June (which have since been miraculously revised up to better match the official data) proving far too pessimistic,” Andrew Hunter, senior U.S. economist at Capital Economics, said in a note.
That’s true, but as CNBC’s video report makes clear, Wall Street economists have performed even worse forecasting job growth thus far in the crisis. It’s still possible that ADP will miss on Friday’s report too — in fact, that’s more likely than not. It’s still a signal that the virus spikes and the lack of progress on extending relief might have spooked employers enough to free any payroll additions for the time being.
That should put more pressure on lawmakers in Washington to break their logjam. As of 1:30 pm ET today, there wasn’t much evidence of that kind of progress, however. Time Magazine reported that voters in swing districts have lost patience with the brinksmanship:
Inside Washington, the stalemate has played out predictably, with each party bitterly blaming the other. But outside Washington — and especially in the nation’s most purple regions — Republican, Democratic, and Independent voters described their frustration in notably non-partisan terms. They appear to point the finger at both Democrats and Republicans, and the federal government writ large.
“We’re sort of stuck in between two arguing parents,” said Helena, a voter from Pueblo, Colorado who said she was a registered Independent, at a July 31 virtual event hosted by Colorado Sen. Cory Gardner. “One side doesn’t want to do what the other side wants to do simply because the other side suggests it. At least that’s what it feels like.”
Yes, that’s exactly what it feels like. Even when both sides want the same thing, they find other obstacles to throw in the way of progress. To the extent that has spooked job creators, this ADP report might spur some rethinking in the negotiations, but at least thus far there isn’t a lot of immediate evidence of it.