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We continue Jobs Week this morning with our monthly private-sector payroll reports from Automatic Data Processing (ADP - Free Report) , and the results were typically excellent: a headline number of 204K new jobs were created by non-governmental firms in the month of April, higher than the estimated 190K. The Services sector led the way again with 160K new jobs, while Goods brought in a respectable 44K.
Medium-sized companies (50-499 employees) made the most monthly hires in the private sector last month: 88K. Small businesses grew 62K while large firms brought up the rear with 54K. By industry, we were again led by Education/Healthcare with 39K, Leisure/Hospitality 36K and a strong showing by the long-dormant Construction industry, 27K. Even Manufacturing put up a strong 10K relative to this long-term employment growth path we’ve been on; before this, during the Obama years, Construction and Manufacturing, and the Goods-producing sector in general, routinely performed poorly.
About the only ding on this morning’s new jobs figures was the down ward revision to March’s headline: -13K to 228K total new jobs. But even this is an overall positive — each month we bring more than 200K new jobs to the labor market, the lower our unemployment totals go, and, presumably, the higher wages will grow. This last aspect we’ve not seen as much evidence of, or at least wage growth has not meaningfully spiked in our current economy.
Friday’s Bureau of Labor Statistics (BLS) non-farm payroll report (the government’s monthly read on jobs growth, which includes non-private employment) will be interesting to see in comparison to this morning’s numbers. These independent surveys often post discrepancies in their data in real time, but through revisions always follow a clearer trend line. Right now, the consensus is to see 195K new non-farm payroll jobs for April, with headline unemployment right around 4%.
As we do start to see things like unemployment dip into the 3% range, and wage growth continuing or even accelerating (last read: +2.7% year over year), we turn our attention to the Federal Open Market Committee (FOMC), which formulates interest rate policy. Currently within a range of 1.5-1.75% after a quarter-point hike during the FOMC’s March meeting, there is virtually no chance the committee raises again at the conclusion of its meeting today. But at the June meeting, a hike to 1.75-2.0 is right now a virtual certainty.
What we will look at following today’s Fed meeting will be any changes to the language the committee uses, especially in regard to the amount of rate hikes the members are currently considering from now until the end of the year. When 2018 first began, the smart money was on 3 total rate hikes; we’ve already seen the first one, with presumably June and September on the way. But depending on how the economy is heating up, interest rates can go a long way toward absorbing rampant inflation.
So far, the data we’ve seen that might lead the committee to consider a fourth rate hike this year isn’t really convincing. Yes, we’re in a robust labor market and a very long-term growth trajectory, but that’s not the same thing as requiring the Fed to step in and augment this growth in any unanticipated ways. Inflation may be creeping into the scenario, but this has been anticipated for a while — it’s nothing we’re not already prepared for.
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ADP Witnessed 204K New Jobs
We continue Jobs Week this morning with our monthly private-sector payroll reports from Automatic Data Processing (ADP - Free Report) , and the results were typically excellent: a headline number of 204K new jobs were created by non-governmental firms in the month of April, higher than the estimated 190K. The Services sector led the way again with 160K new jobs, while Goods brought in a respectable 44K.
Medium-sized companies (50-499 employees) made the most monthly hires in the private sector last month: 88K. Small businesses grew 62K while large firms brought up the rear with 54K. By industry, we were again led by Education/Healthcare with 39K, Leisure/Hospitality 36K and a strong showing by the long-dormant Construction industry, 27K. Even Manufacturing put up a strong 10K relative to this long-term employment growth path we’ve been on; before this, during the Obama years, Construction and Manufacturing, and the Goods-producing sector in general, routinely performed poorly.
About the only ding on this morning’s new jobs figures was the down ward revision to March’s headline: -13K to 228K total new jobs. But even this is an overall positive — each month we bring more than 200K new jobs to the labor market, the lower our unemployment totals go, and, presumably, the higher wages will grow. This last aspect we’ve not seen as much evidence of, or at least wage growth has not meaningfully spiked in our current economy.
Friday’s Bureau of Labor Statistics (BLS) non-farm payroll report (the government’s monthly read on jobs growth, which includes non-private employment) will be interesting to see in comparison to this morning’s numbers. These independent surveys often post discrepancies in their data in real time, but through revisions always follow a clearer trend line. Right now, the consensus is to see 195K new non-farm payroll jobs for April, with headline unemployment right around 4%.
As we do start to see things like unemployment dip into the 3% range, and wage growth continuing or even accelerating (last read: +2.7% year over year), we turn our attention to the Federal Open Market Committee (FOMC), which formulates interest rate policy. Currently within a range of 1.5-1.75% after a quarter-point hike during the FOMC’s March meeting, there is virtually no chance the committee raises again at the conclusion of its meeting today. But at the June meeting, a hike to 1.75-2.0 is right now a virtual certainty.
What we will look at following today’s Fed meeting will be any changes to the language the committee uses, especially in regard to the amount of rate hikes the members are currently considering from now until the end of the year. When 2018 first began, the smart money was on 3 total rate hikes; we’ve already seen the first one, with presumably June and September on the way. But depending on how the economy is heating up, interest rates can go a long way toward absorbing rampant inflation.
So far, the data we’ve seen that might lead the committee to consider a fourth rate hike this year isn’t really convincing. Yes, we’re in a robust labor market and a very long-term growth trajectory, but that’s not the same thing as requiring the Fed to step in and augment this growth in any unanticipated ways. Inflation may be creeping into the scenario, but this has been anticipated for a while — it’s nothing we’re not already prepared for.