Thursday, September 5, 2019
The first week of every month, even holiday-shortened weeks like this one, come with new employment data from the previous month. This morning, we see new August private-sector payroll totals from Automatic Data Processing (NASDAQ:ADP) , which provided good news for the U.S. labor market: a headline number of 195K — 53,000 more jobs than we saw in July (a downwardly revised 142K).
As usual, Services outperformed Goods by a large margin: 184K vs. 11K. That said, the recently flagging Manufacturing sector brought 8,000 of those new jobs last month, which is the strongest we’ve seen this summer.
Medium-sized businesses (50-499 employees) created 77K new jobs last month, followed by 66K from small businesses and 52K from large firms. This shows better-than-expected growth in small firms especially, which had been struggling to keep up in recent months.
Education/Healthcare led the way with 58K — this is a normal occurrence, but even this figure is higher than normal. Next was Leisure/Hospitality with 42K and Trade/Transportation at 39K. So even when we look under the hood, we see strength in monthly jobs totals, at least in the private sector.
Tomorrow morning brings the all-inclusive U.S. non-farm payroll report from the Bureau of Labor Statistics (BLS), as well as a fresh Unemployment Rate. Expectations — recorded prior to this morning’s ADP release — were for between 150-170K new jobs created in August and maintaining 3.7% unemployment, which is historically pretty low. Perhaps we’ll see a bump-up in analyst estimates today based on the ADP numbers, but this remains to be seen.
Weekly Jobless Claims Stay Within Range
Initial Jobless Claims for last week posted a 217K headline, up 1000 claims from the previous week’s upwardly revised 216K. Yet this number stays cozily within the long-term 200-225K weekly new claims numbers we’ve seen, which is a clear representation of a continuing robust labor market.
Whether we start to see dings in the armor as the trade war moves forward (and possibly worsens) remains to be seen, but for now these headwinds do not appear in near-term employment data. Continuing Claims took a step lower from the previous week to 1.662 million, after ebbing above 1.7 million temporarily a few weeks ago. Again, very solid strength in U.S. employment.
Pre-Markets Up Big
Following a roughly 1% gain in major indexes during regular trading yesterday, these strong figures in the jobs market — in addition to relief coming from the U.S.-China trade tensions this week — are sending the Dow up 260 points at this part of the pre-market, the Nasdaq up 95 and the S&P 500 up 27.
It would appear the markets are currently having their cake and eating it, too: robust jobs numbers with a pending interest rate cut next week, plus an unresolved trade war many market participants have chosen to turn optimistic about. Perhaps this will be the tonic for gains this month, after a rough time of it in August.
Mark Vickery
Senior Editor
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