The latest ADP employment report released on Wednesday revealed that the private sector added 102,000 jobs compared to 140,000 expected. The previous month’s figures were revised upwards from 27,000 to 41,000.
- US companies added 102,000 jobs in June, well below the market expectation of 140,000.
- Expectations for June were higher due to the particularly poor result the month prior which was originally reported at 27,000 and revised upward to 41,000.
- May’s result of 41,000 is still the weakest since 2010.
The bulk of the jobs were added in the services sector with 117,000 additions, while goods-producing jobs saw a reduction of 15,000. Small businesses lost 23,000 jobs while mid-sized and large companies added 60,000 and 65,000 respectively according to the ADP. The report come ahead of Friday’s non-farm payroll report which includes public and private-sector employment.
Economists expect private payroll to increase by 153,000, up 90,000, and non-farm employment overall is expected to gain 160,000. The unemployment rate is expected to remain flat at 3.6%, the lowest rate in decades.
ADP June US employment +102K v +140K expected, Prior +27K (revised up to +41K)
Goods producing -15K
Service producing +117K
Small Biz -23K
Large +65K $SPX $NDX #Forex https://t.co/5jFe0tnG2E pic.twitter.com/ikW5Oe0Cjd
— Traders Community (@TradersCom) July 3, 2019
While the rate of unemployment is low, the apparent softening in hiring supports the case for the Federal Reserve to implement interest rate cuts throughout 2019. The economy is now at risk on multiple fronts with a beleaguered housing market, weak inflation pressure, and an ongoing trade war with China which may be escalating.
The labor market has been an economic powerhouse of late, and the Federal Reserve will be closely monitoring any sub-expectation activity for signs of emerging downward trends.
Gold prices have shot up 0.70% today. Spot gold is trading at $1,414.48/oz with a high of $1,435.72/oz and a low of $1,405.08/oz. It’s likely that the upward momentum is directly related to the weak employment data.