Big (fluky?) ADP jobs miss
EDITOR'S NOTE
I have a lot of mixed feelings about the ADP jobs report.
On one hand, the more data points we can get on the economy, from the more diverse array of sources, the better.
On the other hand, ADP clearly tries to position itself as an early "tell" on the "official" Labor Department jobs number each month by coming out 48 hours in advance with the same type of headline number. While that certainly gets it the attention ADP seems to want, it's rarely been that good of a predictor.
This morning, ADP (whose day job is as a payroll processing giant) reported that the U.S. added just 27,000 private sector jobs last month. It's a terrible reading--the worst since 2010. What to make of it? I'm not sure.
Recall U.S. job growth is often erratic--like when we added just 56,000 jobs in February, according to the Labor Dept. That also followed a massive 312,000 job gain in Jan., and has been followed by gains of roughly 225k on average in March and April. ADP itself reported a huge 275,000 job gain for April before this disappointing report.
Still, the market is on high alert for any sign the job market is weakening. After the ADP report crossed at 8:15 a.m., the yield on the 2-year Treasury slumped below 1.8%. As Rick Santelli observed this morning, its plunge this week--we were over 2.1% on Sunday--is the kind of volatility you typically see in commodities, not "sleepy" government bonds.
So the market is taking this as evidence of a slowdown that raises the likelihood of a Fed rate cut sooner than later. It will be very, very interesting to see if Friday's "official" read confirms this--or not.
See you at 1 p.m.!!
Kelly
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