July 30, 2014

July ADP Report: 218K Private-Sector Jobs Added (See Conference Call Notes)

Filed under: Economy — Tom @ 7:53 am

Prediction: Business Insider — 230,000 private-sector payroll jobs added.

The topside number will be released here at 8:15.

I will sit in and take notes on the report’s conference call, which will start at 8:30, coinciding with when the GDP report comes out.

8:19 a.m.: Well, ADP’s home page isn’t loading, at least for me … Zero Hedge says the magic number is 218,000.

OK, finally:

Private-sector employment increased by 218,000 from June to July, on a seasonally adjusted basis.

- Small businesses (1-49 employees) +84,000
- Medium businesses (50-499 employees) +92,000
- Large businesses (500 or more employees) +41,000

From the press release:

Goods-producing employment rose by 16,000 jobs in July, down from 43,000 jobs gained in June. The construction industry added 12,000 jobs over the month, less than half last month’s
gain. Meanwhile, manufacturing added 3,000 jobs in July, less than one-third the number of jobs added in June.

Service-providing employment rose by 202,000 jobs in July, down from 238,000 in June. The ADP National Employment Report indicates that professional/ business services contributed 61,000 jobs in July, down from 79,000 in June. Expansion in trade/transportation/utilities grew by 52,000, down slightly from June’s 56,000. The 9,000 new jobs added in financial activities was down 25% from last month’s number.

… Mark Zandi, chief economist of Moody’s Analytics, said, “The July employment gain was softer than June, but remains consistent with a steadily improving job market. At the current pace of job growth unemployment will quickly decline. Layoffs are still receding and hiring and job openings are picking up. If current trends continue, the economy will return to full employment by late 2016.”


Zandi: “Feels like the job market is humming … good by any historical standard.”

Current pace of job growth (200K+/mo.) labor market slack of all kinds will decline by 0.6% to 0.7% or so every year (those who have withdrawn, PTers who want to be FT, and others, roughly 1.5% of the workforce right now). So it will take 2-1/2 to 3 years to get to full employment (7 years after end of recession — Ed.) Zandi acknowledges that it was a very long road back, indicating the hit the econ took during the recession (and the sucky policies which made the “recovery” so painful — Ed.).

As to quality of jobs, job growth started to expand out from low-paying jobs. Now it’s across all pay scales, even “middle-paying” jobs due to resumption of activity in the housing market (though slower than had been hoped for). Job growth also returning in government.

Job creation quality has steadily improved and is “pretty much across the board.”

As to pace of wage growth — are people getting pay increases greater than inflation — “so far that hasn’t happened.” Basically, it’s been zero. But the absorption of slack will lead to more definitive signs of accelerating wage growth a year or so from now. Already happening in certain parts of the country in certain industries, but not really visible overall. THEN, perceptions and attitiudes will change, and there is some movement now (e.g., Conference Board consumer confidence yesterday).

“It feels pretty good. Everything looks very positive.”


(Chris Rugaber of AP on GDP) — Are GDP numbers supportive of job growth? (Zandi was surprised at 4% figure.) Numbers now feel more consistent with jobs numbers. Very encouraging, very positive. Thinks Q1 will eventually get revised to a lower decline.

(Rugaber on job quality specific) — Financial services had been shedding jobs until 6-9 months ago, but now it’s adding to payrolls. But we’re getting job growth everywhere. Media is still shedding jobs. Hard-pressed to come up with other industry sectors not adding payrolls.

Expects 6-12 months down the road a significant pickup in monthly job growth.

(Richard Neal, GDP) 1.7% of 2Q increase was in inventories. Zandi says Fed will downplay 2Q’s inflation pickup, b/c rate is still below target. Inflation will start to pick up in a substantive way by this time next year. Housing market is tight, vacancy rates are coming down, rent growth is accelerating and tends to be persistent once it starts to accelerate. That will contribute more to inflationary pressures, and will be patently evident a year from now, at which time according to their script they’ll start raising interest rates.



  1. Who is this Zandi person? Sounds like a shrill Obama PR rep than an objective observer. Market is humming? Give me a break.

    Comment by zf — July 30, 2014 @ 9:57 pm

  2. He’s a supposedly highly respected economist at Moody’s Analytics. Yes, he is annoying. Today vindicated him a little, but I am very skeptical as to whether the 4% reading will survive revisions.

    Comment by Tom — July 30, 2014 @ 10:28 pm

  3. [...] only “healthy” if you forget about the millions of workforce dropouts. Yesterday, in the ADP Jobs Report conference call, economist Mark Zandi predicted that this level of job growth will finally get the economy back to [...]

    Pingback by BizzyBlog — July 31, 2014 @ 4:44 pm

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