Jobs Created Data Comes In from ADP, At Less Than Half Expected

Private-sector payroll numbers are out this morning from Automatic Data Processing ADP for the month of May, and they look somewhat disappointing: 128K new jobs in the private sector created last month was less than half the 300K expected, with April’s revision -45,000 to 202K.

This seems to represent a new cycle over the past three months now, well off the 500K+ new private-sector jobs we had been seeing previously. In fact, it’s the single-worst month in ADP headline jobs numbers since April 2020, in the early stages of the pandemic.

The breakdown between Goods and Services was relatively normal — 24K and 104K, respectively — but other aspects of monthly jobs numbers do mark a clear shift from what we’d been seeing: Leisure & Hospitality only brought in 17K new positions in the private sector last month, and Trade/Transportation/Utilities came in at just 8K.

We were led by Education/Healthcare at 46K — in some ways a throwback to pre-pandemic job gains — followed by Professional/Business Services at 23K and Manufacturing at 22K. This is actually a good number for Manufacturing, which helps bolster some of the recent goods-producing metrics we’ve seen of late.

Large businesses (over 500 employees) did fine last month: +122K new private-sector jobs, and medium-sized firms (between 50 and 499 employees) was decent at +97K. But it was small companies, which do not have the same ability to offer higher wages, stock options, healthcare benefits, etc. that severely underperformed: -91K jobs were created by companies with fewer than 50 employees in April.

Initial Jobless Claims for last week were again quite solid: 200K, lower than expectations and the upwardly revised 211K from the previous week. Continuing Claims, from a week in arrears, reached a new half-century-plus low: 1.31 million from a downwardly revised 1.34 million the previous week, which itself had been the lowest long-term employment claims number since the late 1960s.

If we’re seeing a decline in monthly employment numbers, they’re not yet showing up here in this weekly data. Which may be considered odd; one might thing week-to-week data points would bring more definition to real-time conditions. Perhaps there are other forces at work, such as new company start-ups from people who’d previously worked for someone else.

The final read on Q1 Productivity improved from its dismal level previously printed, but not by much: -7.3% versus -7.5% last time around is still the worst quarterly read we’ve seen since Harry Truman was president. And related Unit Labor Costs for Q1 continued to rise from the previous release: +12.6% in its final read, beneath the unrevised +11.6% reported last time.

These are not bright spots for the U.S. economy in the first section of 2022: labor costs continues to spike while productivity overall remains negative. Let’s hope for a turnaround in Q2.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.