ADP posts 44,000 private hires

ADP said on August 5 that U.S. private employers added 44,000 jobs in July, a marked slowdown from June and a weaker reading than economists had expected. The report landed alongside other labor and activity data that pointed in a different direction: the U.S. services sector kept expanding in July, and new applications for unemployment benefits remained historically low. Together, the releases sketched a labor market that is cooling in hiring without showing a broad wave of layoffs. The next major checkpoint comes on August 7, when the Labor Department is due to publish the official July employment report. ### How weak was the ADP reading? ADP reported 44,000 private-sector jobs added in July, down from 98,000 in June. The payroll processor said annual pay growth for workers who stayed in their jobs was 4.4% in July. ADP said the report is based on anonymized payroll data covering more than 26 million private-sector employees. (mediacenter.adp.com) CNBC reported that economists surveyed by Dow Jones had expected a bigger July gain, and that the ADP release came two days before the government’s payrolls report. That gap between the ADP figure and expectations put immediate focus on whether hiring demand is easing faster than previously thought. (mediacenter.adp.com) ### If hiring slowed, why are other indicators still firm? The Institute for Supply Management said its Services PMI rose to 54.1 in July from 54.0 in June. A reading above 50 indicates expansion, and ISM said business activity was 59.1 while new orders were 57.2. (cnbc.com) The same ISM report showed the services employment index at 47.4 in July. That left a split inside the services data itself: overall activity and orders pointed to continued growth, while the employment component remained below 50. ### What did jobless claims show on August 6? (ismworld.org) The Labor Department said initial claims for state unemployment benefits were 199,000 in the week ended August 1. That was up slightly from the prior week but remained below 200,000 for a third straight week, according to Bloomberg’s summary of the release. The department’s weekly claims report also showed the advance number of actual unadjusted initial claims at 171,246. (ismworld.org) Low claims levels typically indicate employers are not cutting workers in large numbers, even when hiring slows. ### What did the June openings data add to the picture? The Bureau of Labor Statistics said on August 4 that job openings were little changed at 7.4 million in June. (dol.gov) Hires were unchanged at 5.3 million, while total separations were little changed at 5.4 million. Those figures did not show a labor market in outright retreat. (dol.gov) Instead, they added to the pattern seen in claims and services activity: softer demand in some measures, but no broad-based collapse in turnover or layoffs. That characterization is an inference from the June JOLTS release, the August 6 claims data and the July ISM report. (bls.gov) ### Why does the August 7 payrolls report matter more? August 7 is the date of the Labor Department’s official employment report for July, which includes nonfarm payrolls, the unemployment rate and wage data. CNBC said economists surveyed by Dow Jones expect payrolls growth of 83,000 and an unemployment rate of 4.2%. (bls.gov) That report will give policymakers and investors a broader read than ADP alone because it covers public and private employment and is the benchmark monthly labor-market release. The Bureau of Labor Statistics is scheduled to publish it at 8:30 a.m. ET on Friday, August 7. (bls.gov) (cnbc.com)