ADP Employment Survey: 371,000 Jobs Lost In July. Looking Ahead to Non-Farm Payrolls
The ADP private employment survey suggests that 371k private jobs were lost in July, a harsher figure than the -300k median forecast, but an improvement from the -463k print in June.
“Despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least several more months, albeit at a diminishing rate,” noted ADP spokesman Joel Prakken.
Though the report was worse than consensus, the pace of lay-offs in July was the smallest decline in nine months, “which supports the view that Friday’s employment report will indicate a slowing in the pace of employment declines at the start of the third quarter,” said economists at RDQ.
Not all analysts were as optimistic, however.
“The improvement relative to last month is encouraging, though we continue to believe that the U.S. labor market remains deeply fractured,” said strategist Ian Pollick from TD Securities.
Forecasts for Friday’s official report for total employment range widely from -190k to -375k. Notably, all forecasts project a vast improvement from the June figures, which showed the economy shedding 467k jobs.
Details of the ADP report:
- Small businesses (<50 workers): -138,000
- Medium businesses (50-500 workers): -159,000
- Large businesses (>500 workers): -74,000
- Goods-producing sector: -169,000
- Service-providing sector: -202,000
- Manufacturing industry: -99,000
- Construction industry: -64,000.
- Financial industry: -26,000
Ian Shepherdson, economist at High Frequency Economics, said the ADP survey was a worthy guide in June but that’s not to say it will be accurate this month.
“Unfortunately there is no guarantee of a repeat performance in July,” he said. “The medium-term correlation between ADP and the official numbers is good, but it can be very wrong in individual months.”
Also released this morning was the Challenger Mass Layoffs report. The survey said there were 97,373 job cuts announcements in July, a worse figure than the 74,393 announcements in June.
Analysts at RDQ provide some context. “Following five straight monthly declines, layoff announcements picked up somewhat in July,” they said. “However, layoff intentions were 5.7% below the prior year’s level and well below the levels of job cut announcements seen in the fourth quarter of 2008 and the first quarter of 2009.
Taken together, two labor reports this morning came in worse than expected. A third, the subcomponent of the ISM services index, will be released at 10 am.
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