The US economy added a stunning 497k jobs in June, according to ADP's Employment Report. That's more than double the 225k expectation...
Source: Bloomberg
That is the biggest monthly jump since Feb 2022.
Goldman suggests that a distortion in the ADP seasonal factors contributed to the strength, as ADP employment growth had picked up in June in 6 of the last 7 years - and by 193k on average excluding 2020.
Job creation surged in June, led by consumer-facing services. Leisure and hospitality, trade and transportation, and education and health services showed strong gains. Still, the market was fragmented, with manufacturing, information, and finance showing declines.
Bear in mind that ADP has under-estimated the official BLS data for 9 of the last 11 months (and 14 of the last 17 months)...
Source: Bloomberg
“Consumer-facing service industries had a strong June, aligning to push job creation higher than expected,” said Nela Richardson, chief economist, ADP.
“But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”
On the bright side (for The Fed), wage growth slowed:
Job stayers saw a year-over-year pay increase of 6.4 percent, down from 6.6 percent in May.
For job changers, pay gains slowed for the 12th straight month, to 11.2 percent, the slowest pace of growth since October 2021.
It should be no surprise that wage growth is slowing since almost all job growth is leisure/hospitality and trade/utilities, while high-paying Information, finance and professional jobs all declined.
Finally, claims - coming up next - are strongly diverging from this optimistic ADP perspective...
Source: Bloomberg
But, hey, a 3%-handle on 'unemployment' is good enough for the Biden administration... even if it's not helping The Fed ease off.
This huge surge is not at all what The Fed wants to see.
