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ADP Sees 692K Jobs in June, Big on Services

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Wednesday, June 30, 2021

On this last day of June and final trading day of Q2 and 1H of 2021 (how time flies!), pre-market futures are flat-to-down at this hour. It’s been quite a nice six months for market participants, as Covid vaccines retarded the spread of the coronavirus in most high-traffic regions on the U.S., allowing for a much-anticipated Great Reopening, through which we continue to pass today. The Dow is +13.5% in the past six months, the S&P 500 +16%, the Nasdaq +14.4% and the small-cap Russell 2000 +18.6%.

Chances are these growth rates are likely to abate, as realities begin to intrude on glorious fantasies of a consequence-free reopening. They’ve already begun, in fact: input costs on new homes has pushed price points out of the affordability range for many would-be homebuyers, for one example. As the stock market is commonly known as a forward indicator on economic growth, the second half of 2021 will more likely be a perception of conditions in the spring of 2022.

Private-sector jobs totals for the month of June are out this morning from Automatic Data Processing (ADP - Free Report) , and results were better than expected: +692K new private-sector positions were filled in the past month, up from the +550-600K expected. Revisions for May came down to 886K from the originally-reported 978K, but the two months in aggregate have yielded 50K more jobs than anticipated.

Goods-producing jobs came in at 68K while the Services sector gained 624K — meaning nine out of every ten jobs filled in the past month came from Services. The breakdown of industries bear this out: Leisure/Hospitality continued to build back, +332K on the month, followed by Education/Healthcare at +123K and Professional/Business Services at +53K. Trade/Transportation/Utilities brought 62K new jobs, while Construction gained 47K.

Large companies (>500 employees) eked out medium-sized businesses (50-499 employees), 240K to 236K, with small firms making up the difference. For much of the upswing in U.S. labor force — now north of 3.1 million new jobs created in 2021, according to the ADP survey — smaller companies had been putting the most people back to work. Today, with their capacity for better healthcare packages and stock options, large firms seem to be winning out.

Today’s ADP headline is also quite in-line with expectations for Friday’s non-farm payroll tally from the U.S. Bureau of Labor Statistics (BLS): +706K. This would be a notable bump up from the 559K reported last month for May. The Unemployment Rate is expected to continue to tick down — 5.6% from the 5.8% in last month’s report, which is the first time since the pandemic unemployment went sub-6%. In June 2020, the Unemployment Rate was still 11.1%.

For today, the S&P 500 looks to keep its four-day winning streak intact, which would naturally lead it to yet another record high as of today’s close. The Nasdaq is riding higher in six of the past seven sessions, as tech names and other growth sectors re-gain favor among investors. So far, these ADP employment numbers have moved the needle not at all; we’ll see if anything changes by the time the second half of 2021 gets rolling.

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