ADP said only a net 127k private sector jobs were created in November, below the estimate of 200k and almost half the pace of 239k seen in October.
Notable was the 100k person drop in manufacturing employment while construction shed 2k jobs. The service sector added 213k jobs but the dispersion was VERY mixed. Leisure/hospitality hired a net 224k, education/health added 55k and trade/transportation/utilities added 62k. On the other hand, lost jobs were seen in financial activities, information and professional/business services.
Those leaving their job for better opportunities saw a 15.1% y/o/y wage increase. For those ‘stayers,’ pay rose by 7.6% led by leisure/hospitality. ADP said “Pay growth remained elevated even as it continued a modest but broad based deceleration.”
Here is what the ADP chief economist said broadly, “Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains. In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting and the post-pandemic recovery is stabilizing.”
By the way, the tech job layoffs are sprinkled in the ‘information’ and ‘professional/business services’ and with respect to the rest of the economy, outside of leisure/hospitality and education/health where both groupings still can’t find enough people, employers are clearly slowing the pace of hiring. And while overall the pace of firing’s remains modest as seen with initial jobless claims, it’s getting more difficult in finding a job as more are continuing to collect claims.
Lastly, we know the housing sector is in a recession and I believe it’s safe to say that manufacturing is now too. Treasury yields are about where they were just prior to the news release and I’ll add that I believe we’re going to see a 4 handle on the unemployment rate within the next few months.