Yahoo Finance ADP Payrolls +150K; Jobless Claims Climb Higher
Wednesday, July 3rd, 2024
Pre-market futures are down slightly this morning. We were mixed ahead of a slew of economic data — more about this below — but are now -20 points on the Dow, -7 on the S&P 500 and -33 points on the Nasdaq at this hour. Keep in mind both the S&P and Nasdaq closed yesterday at new all-time highs. This morning’s performance leader is Paramount Global PARA, as its deal with Skydance appears to have reached a preliminary agreement.
Automatic Data Processing ADP has brought us new payroll numbers this morning. Specifically, these are private-sector jobs only — not including government hires like public school teachers, federal and municipal staffers, et. al. — and are not derived from the same sources as are the non-farm payrolls due Friday from the U.S. Bureau of Labor Statistics (BLS). The Headline number of +150K new private-sector job gains was shy of the +160K expected and the upwardly revised +157K for May.
The concentration of Services-sector jobs continues to lead the narrative. Of the 150K total private-sector jobs reported last month, +136K of them were from Services — particularly Leisure & Hospitality at +63K, which amount to roughly 40% of all gains in today’s ADP report. Goods-producing jobs brought just +14K, led by Construction with +27K but subtracting -8K from Natural Resources/Mining and -5K from Manufacturing.
Small businesses (fewer than 50 employees) only brought in +5K new private-sector jobs. Large firms, which can offer greater packages of healthcare and stock options, had +58K new jobs filled in the private sector, with +88K medium-sized private-sector jobs brought in. Those who stayed at their current companies averaged +4.9% wage gains, while job-changers averaged +7.7% for the month. Both of these metrics are down roughly -1% from the last print.
In aggregate, today’s ADP report was good for those of us looking for signs of moderating inflation. At +150K total monthly jobs filled in the private sector, we’re still above the total new jobs needed to account for the fast-retiring Baby Boomer generation. ADP Chief Economist Nela Richardson noted the gradual easing of the formerly hot labor force, but said she would like to see more broad-based employment over time.
Initial Jobless Claims are out a day early today, as Thursday we celebrate Independence Day. Here we see a headline of +238K — about 5K above estimates, +4K from the previous week’s slight upward revision. This marks the third-straight month north of +230K new jobless claims; clearly we’re a new tier higher this summer than we were this past spring, where we scarcely ever reached +220K in a given week.
Continuing Claims reached a new multi-year high this morning. A headline 1.858 million longer-term jobless claims — reported a week in arrears from initial claims — was the highest monthly figure since November of 2021, and the fourth-straight tally above +1.8 million. It’s also a pretty big jump from the previous week’s downwardly revised 1.832 million, and yet another piece of evidence that the overall labor market is cooling.
The May Trade Balance is also out ahead of today’s opening bell. At -$75.1 billion, this is a good news/bad news scenario: it’s better than expectations for a -$76.3 billion trade deficit, but the deepest we’ve seen since October of 2022. This amounted to a bigger decline in merchandise exports than imports — -0.7% versus -0.3%, respectively. Overall, we’re down -4.2% year over year, and, while not exactly drastic, this drag may wind up asserting itself in Q2 GDP numbers.
Finally, Constellation Brands STZ reported fiscal Q1 results this morning. The New York-based provider of beer, wine and spirits topped earnings estimates while missing slightly on revenue estimates. Guidance remained in-line, and shares are up +3% in early trading. This adds to the company’s +6% growth year to date, but remain below year-ago levels, which were at or near all-time highs. STZ brought a Zacks Rank #3 (Hold) to today’s earnings report.
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