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ADP & Claims: Slower Gains, Claims Still Show Tight Market

June 2, 2022
Bottom Line:   ADP reported slower job gains than expected in May. And April gains were revised modestly lower. Construction jobs were notably lower as housing activity slowed. And the gains in the leisure and hospitality sector slowed. On a trend basis, leisure and hospitality hiring has decelerated sharply with the three months ended in May running at an average of 42k, well below the six and 12-month averages of 120k and 144k, respectively. Of course, this is to be expected after 18 months of strong hiring as the sector rebounded from Covid shutdowns. Overall, hiring appears to be decelerating towards of around 200k jobs per month. While the deceleration might have arrived a few months earlier than expected, this still appears to be a normal return to equilibrium after an incredibly volatile two-year period. That said, this report leaves some downside risk for the government's national payroll survey due tomorrow, expected to be 325k.
Separately, jobless claims fell again, dropping back to 200k and further reaffirming the notion that labor markets remain tight but are reaching a point of equilibrium, where claims should run in the 180 - 220k range.
ADP National Employment ROSE by 128k in May, compared with the consensus estimate for a gain of 300k. Over the past 12 months, private payrolls have increased by an average of 438k per month, lifting employment to 4.2% ABOVE its year-ago level.
Jobs in Goods-Producing Industries
ROSE by 24k jobs as Manufacturing gained 22k workers but Construction lost 2k jobs.
Service-Producing Industries ROSE by 104k jobs with Professional/Business Services hiring 24k workers, Trade/Transport/Utilities adding 8k, and Financial Activities increasing by 10k workers.
Small Firms fired 91k workers, Medium-Sized Firms grew by 97k employees while Large Firms added 122k positions.
Article by Contingent Macro Advisors