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Jobs reports - non-factor?

JD_co
in Off-Topic
ADP reports came out today showing a -33K loss of jobs in the private sector for June instead of +100K gain anticipated. Its the first such drop in over 2 years.

Per Reuters:

"Use ADP only to gauge the big picture," said Carl Weinberg, chief economist at High Frequency Economics.
"Right now, that picture shows ADP's private sector employment estimates declining steadily since December. Today's big drop underscores that decaying trend."

The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the more comprehensive employment report for June due to be released on Thursday by the Labor Department's Bureau of Labor Statistics. There is no correlation between the ADP and BLS employment reports.


If tomorrow's job report were to confirm that the private sector jobs numbers are sagging, can the markets really ignore this indicator?

Comments

  • MarkMark
    Wouldn't surprise me.
  • Observant1
    edited July 3
    I've read the same Reuters article referenced in the OP.
    Significant differences between the ADP and BLS Nonfarm Payroll Employment reports are not uncommon.
    The Civilian Unemployment Rate has fluctuated between 4.0% and 4.2% thus far in 2025
    which is very low by historical standards. The rate was 4.2% in May 2025 (latest data available).
    I'd guess markets might rally if the June unemployment rate was ≥ 4.4%.
    Bad news is often good news for the markets...
    This could be interpreted as a favorable development vis-a-vis Fed rate cuts.
    Unless the excrement hits the whirling blades, I don't believe the Fed will cut in July.
  • Sven
    If neither job numbers from ADP or BLS are in line with expectation, there in no need to cut rates in July.

    CME Fedwatch Tool stated the target rate stay unchanged. Next Fed meeting in in September.
    https://cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
  • DrVenture
    Agree on all these points, softening in labor would encourage rates cuts, if inflation goes no higher. Continuing strong jobs and stable inflation would delay rate cuts. Softening in jobs and higher inflation over a period of months, would be a problem for the FED. I think the FED would act on inflation, until jobs significantly deteriorated. The markets would cheer rate cuts, like they cheer layoffs. Both boost bottom lines. Not sure that markets care about inflation, as long as companies have pricing power. At least until consumer spending drops off the cliff.

    All of this is where the stock market and overall economy can diverge.
  • Sven
    Thanks to tariffs, food prices and many retail items are creeping up. These days I don’t see big TV flying of the shelves at Costco or Best Buy. Dining in restaurants are reporting falling sales, and some are going bankrupt. At what point when the consumer would reduce their spending ? The American economy is largely based on consumer spending after all.

    Cutting rate now does not make sense unless these is a severe deterioration on labor market and quick rise with inflation. Let’s hope the GDP stays positive since Q1 2025 went negative.
  • DrVenture
    I expect GDP to be schizophrenic. Continuity of orders has been disrupted. Q1 shocked by tariff chaos, followed by orders being pulled forward in Q2, maybe scavenging from Q3. Perhaps Q4 impacted by tariff-induced price hikes making their way into the system. A consumer pullback? A roller coaster. The forecast growth for the year is expected to be around 1.4%. This would be about half of the last couple years.

    Tourism problems, foreign boycotts, shifting trade alignments, all could play a part. None of that in a positive way. I keep coming back to the fact that we have had labor shortages in many industries for many years now. A demographic issue. So job numbers may not deteriorate too badly overall. Deportations will further cause job shortages. It remains to be seen who will fill those vacated jobs.

    So many sudden changes and unknowns.
  • MarkMark
    "So many sudden changes and unknowns." Indeed! I feel as though I should not only continue to sit on my hands but that I should also consider nailing them to the chair. I need at least one finger to type though.
  • gman57
    edited July 5
    Job opening are of course going to go up. Deport thousands and thousands of people who had those jobs ...guess what... more job openings but many Americans don't want those jobs. We already had a labor problem now it will just get worse. S T U P I D
  • Old_JoeOld_Joe
    Actually, not even necessary to actually deport them. Just make them afraid to show up to work- employer posts "help wanted".
  • Observant1
    edited July 5
    Non-farm payrolls increased by 147,000 in June which was higher than the estimate of 110,000.
    Government employment (state and local) led all categories with an increase of 73,000.
    Private payrolls had the smallest gain in eight months—74,000.
    Also, labor force participation fell to its lowest rate since December 2022—62.3%.
    People who have dropped out of the labor force are not represented in unemployment rate statistics.
    It will be interesting to watch private payroll employment and labor force participation in the coming months.
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