ADP Employment Report Indicates Weakest Performance Since January 2021

As the market prepares for tomorrow's critical payrolls print, the ADP employment report and jobless claims have been released today, offering a preliminary look at the state of the job market. This data is expected to provide some insight for day traders and help gauge the response of the algorithms.

Employment Report Falls Short of Expectations

Contrary to the anticipated addition of 145k jobs, which would have been a slight improvement over July's 122k, the ADP employment report for August showed a disappointing 99k - the lowest number since January 2021. This data comes from Bloomberg and marks the fifth consecutive monthly decline in job additions according to the ADP employment report.

Decline in High-Paying Job Segments

Notably, the sectors that typically offer the highest-paying jobs, such as Manufacturing and Professional Services, experienced the most significant job losses. "The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth," commented Nela Richardson, chief economist at ADP. "The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown."

Comparison with BLS Data

It's worth noting that ADP's figures have underestimated the official Bureau of Labor Statistics (BLS) data for 10 out of the last 12 months, according to Bloomberg. This suggests that while job growth is weak (which is positive news for the doves), wage growth has halted its disinflationary trend, painting a less than ideal picture. Could this be a sign of stagflation?

Bottom Line

The ADP employment report for August 2024 paints a concerning picture of the job market, with the weakest performance since January 2021 and a decline in high-paying job sectors. As we anticipate the official BLS data, it's worth considering what these trends mean for the economy. Could we be heading towards a period of stagflation, where slow economic growth and high unemployment coincide with rising prices? What are your thoughts on this matter? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.