The forward indicator for monthly U.S. employment is this morning’s private sector payroll report from Automatic Data Processing ADP, a major payroll services firm. In the month of September, ADP reports a gain of 154K in U.S. jobs. This is lower than both expectations of 173K and the average of the past four months.
August private sector jobs were revised down by 2000 to 175K. Estimates for Friday’s BLS non-farm payroll report — the big one, including government sector jobs the ADP report does not include, as well as the unemployment rate — currently average out to 170K, although following this morning’s disappointing number, we may see some downward revisions before Friday.
Also, this “disappointing” number from ADP this morning is relative: at 154K new jobs, especially with the U.S. labor market nearing full employment, we’re still looking at a healthy jobs situation. Though the new job gains have dropped significantly, this is part of what happens when a labor market tightens and we approach full employment.
Broken down by industry sector, we see Professional and Business Services carrying the biggest load at +45K new jobs in September, followed by Trade/Transportation/Utilities at +15K, and both Construction and Financials weighing in at +11K. Manufacturing remained the laggard at -6K. Large businesses brought in 64K, Medium 56K and Small businesses posted 34K.
The U.S. trade deficit for August was also released this morning, reaching $40.7 billion, up roughly $1 billion from the July tally. Though still an extraordinary number, these figures are strongly relative — we haven’t had a trade imbalance of $50 billion for four and a half years.
All in all, these numbers appear pretty “Goldilocks” from an initial perspective. Meaning that if the non-farm payroll numbers stay positive — but not too positive — then we may continue to see a delay in the Fed deciding to raise interest rates. Not that we were expecting a rate hike a week before the General Election this November anyway, but current conditions do not throw any of these type of scenarios into question.