ADP adds just 44,000 jobs

ADP said on Wednesday that U.S. private employers added 44,000 jobs in July, a sharp slowdown from June and well below economists’ expectations. The report landed two days before the Labor Department’s July employment report, which investors are watching for a broader read on hiring and wages. A separate Labor Department release on Thursday showed initial claims for unemployment benefits rose to 199,000 in the week ended August 1, keeping layoffs low even as hiring appears to be losing momentum. Markets are also weighing what the data could mean for the Federal Reserve, which has kept rates steady while officials look for clearer evidence on inflation and labor demand. ### How weak was the July ADP report? ADP reported 44,000 private-sector jobs for July, down from 98,000 in June. CNBC said economists surveyed by Dow Jones had expected an increase of 83,000. ADP said annual pay for workers who stayed in their jobs rose 4.4% from a year earlier. (mediacenter.adp.com) Nela Richardson, ADP’s chief economist, said hiring and pay data were “broadly indicative of a healthy economy” but added that employers were “hesitant to hire and reluctant to replace departing workers.” Her comment pointed to slower turnover rather than a broad rise in layoffs. (mediacenter.adp.com) ### Where did employers still add jobs? Health care accounted for most of the gains in July, according to ADP’s industry breakdown. The report said service-providing industries added jobs overall, while some cyclical or goods-related categories were weaker. Yahoo Finance, citing the ADP release, said the July figure followed 98,000 jobs added in June and 122,000 in May, extending a run of softer readings after stronger hiring earlier in the spring. (mediacenter.adp.com) The ADP report is based on anonymized payroll data covering more than 26 million private-sector employees, compiled with the Stanford Digital Economy Lab. ### What did the jobless claims data show? The Labor Department said initial claims for state unemployment benefits rose by 1,000 to a seasonally adjusted 199,000 for the week ended August 1. Reuters, as carried by U.S. News, reported economists had expected 202,000 claims. The prior week’s figure was revised up to 198,000. (finance.yahoo.com) Claims remain low by historical standards, and that matters because weekly filings are one of the timeliest readings on layoffs. The Labor Department’s release said the data are a leading indicator of emerging labor market conditions. ### Why are investors focused on the Fed? Morningstar said markets still expected at least one rate increase before year-end as of Wednesday, even with hiring slowing, and said wage growth would be a key variable in the July jobs report. (money.usnews.com) CNBC also reported that investors were betting the Fed could still raise rates later this year if inflation data do not improve. (dol.gov) The dollar was trading near a multi-week low ahead of the employment data, according to market reports published on Thursday. Broader trading reflected caution as investors waited for the government payrolls numbers and reassessed the path of U.S. interest rates. ### What comes next in the labor-market calendar? (morningstar.com) Friday’s Labor Department employment report is the next major test. CNBC said economists expected nonfarm payrolls to rise by 83,000 in July and the unemployment rate to hold at 4.2%. Morningstar said economists were also watching for any pickup in wage growth. August 8 is the next scheduled release for the government’s July payrolls and unemployment figures. (econotimes.com) The Labor Department’s weekly claims report lists August 13 as the next release date for jobless claims data. (ycharts.com) (cnbc.com)