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ADP Payrolls In-Line at 156K, Slowing from 2018

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Wednesday, July 31, 2019

Private sector payroll totals for the month of July from Automatic Data Processing (ADP - Free Report) came in-line with expectations this morning: 156K new non-government jobs were brought to the market. This is higher than the upwardly revised 112K from June, but still lower than the 2019 average so far of roughly 170K monthly private-sector job growth.

The Services sector far outperformed Goods producers, 146K to 9K, respectively. In fact, Manufacturing as a whole gained merely 1000 new jobs this month. Leaders by industry are, as per normal, Education/Health Services at 37K, followed by Trade/Transportation at 27K, Leisure/Hospitality at 26K and Construction at 15K.

Large and Medium-sized companies brought in more than 90% of all new jobs, while Small businesses (fewer than 50 employees) brought in just 11K for the month. In fact, companies with fewer than 20 employees have seen negative job growth for three months in a row. Lack of resources on offer to lure new employees — healthcare benefits, stock options, etc. — are hurting small businesses in competition for new workers.

As we await the Fed’s decision to cut interest rates this afternoon, one element that will likely factor into the decision will be slowing job growth in the U.S. Where we saw an average jobs gain  of 225K per month through 2018, we now see around 170K per month so far in 2019 — and slowing.

Q2 Earnings Roundup

General Electric (GE - Free Report) continues its long turnaround from its multi-year lows late last year, topping earnings estimates by 5 cents to 17 cents per share (though still down 2 cents from the year-ago quarter), on revenues of $28.83 billion, which narrowly missed the Zacks consensus (and is down from $30.10 billion a year ago). Keep in mind GE consists of many shifting parts, and until it fully takes new form, GE will continue to fight toward re-attaining its historical prestige.

Investors have already gotten on the GE bandwagon — shares are up 40% year to date, and are gaining another 3%+ in pre-market activity following its Q2 earnings report. GE currently has a Zacks Rank #1 (Strong Buy) rating. For more on GE’s earnings, click here.

Health insurance giant Humana (HUM - Free Report) easily outperformed expectations on both top and bottom lines this morning, posting $6.05 per share versus $5.24 analysts were looking for. Revenues of $16.25 billion rose 2.26% from estimates, up from $14.26 billion a year ago. The Zacks Rank #3 (Hold)-rated stock has swung to the positive for the year, up 6.5% in today’s early session. For more on HUM’s earnings, click here.

Entertainment streaming platform Spotify (SPOT - Free Report) reported mixed Q2 results this morning, with 47 cents per share beneath the 51 cents expected and 61 cents posted in Q2 2018, on $1.87 billion in sales that outpaced estimates by 2.4%. Revenue growth (also up from $1.50 billion a year ago) is key for a company like Spotify, though its year-to-date stock growth of 36.7% year to date has given up around 3% on the Q2 release. For more on SPOT’s earnings, click here.

Mark Vickery
Senior Editor

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