ADP Chief Economist: Jobs Market Strong But Fragmented

this is I mean a number that shocked pretty much everybody is the jobs Market really this strong or are there some anomalies in the reading yeah it's incredibly strong Matt this number is based on 26 million workers in the private sector it's a private sector look it's one indicator and a handful that came out today that shows that underlying uh what we're seeing in June is Incredible strength but the caveat is it's incredibly fragmented when you wrote down the numbers just a few minutes ago what you saw is that consumer facing Industries led the in terms of hiring I could also add to that 60 of the hiring was done by small firms firms with less than 50 employees the ones that don't show up in the S P 500 Index that's where we're seeing the job gains those larger firms have largely retreated from hiring small firms are picking up the slack so consumer facing small firms that's what's driving the labor market right and I guess good news for the economy bad news for the stock market right because that could push the FED to raise rates even higher Nila have those higher rates not have any had any impact on these smaller firms aren't they concerned about you know a five and a half percent fed funds rate certainly hiring higher interest rates affects borrowing costs and on Main Street from small Mom and Pops to Consumers and we're seeing that in our data in terms of the manufacturers that's really taken ahead they've been shedding jobs for the last several months also B2B businesses aren't faring very well so information professional business services like accountants those jobs are not returning or rebounding it's really those people-to-people jobs Healthcare education retail members still want to travel still wanted vacations those jobs are staying straight one of the things we have constantly heard is that the jobs Market while robust based on this data is a lagging indicator and getting back to the market trying to interpret where interest rates go from here a lot of people wondering what the inflation picture is going to look like we just ran some sound from David Rosenberg who who feels like deflation is what we should be worried about as opposed to inflation going forward what do you see when you look at the inflation picture right now I think of wages as the bridge between the labor market and the inflation picture and what we've seen is that wage acceleration is coming down despite that tremendous job growth in consumer facing service sector jobs every one of those sectors I named saw a deceleration in weight in K gains so that's good news for people who are concerned about inflation who are concerned about the wage price spiral it's not looking like that is materializing the cost of more job gains is not higher inflation at least if you look at our numbers based on millions of workers across the country so we're not seeing a recession in the labor market we're also not seeing a Stoke up in inflation

Channel: Bloomberg Television

Views: 1,271

Keywords: Bloomberg

Id: PwzRmb2cCOg

Length: 3min 12sec (192 seconds)

Published: Thu Jul 06 2023