ADP said 278k private sector net jobs were created in May, well above the estimate of 170k. April was revised down by 5k to 291k. While stronger than expected, there was a particular outlier and that was the 94k person increase in the natural resources/mining sector. I went back to data given from ADP to 2011 and there has never been a month that saw this much hiring in this particular group. It can’t be in oil and gas as rig counts continue to fall so I’d invite some help here on where all these jobs came from. Maybe some new copper project somewhere started.
With respect to the service sector, 168k jobs were added with most coming from leisure and hospitality but lost jobs were seen in information (tech), professional services, financial activities and education/health services. That 168k figure compares with 229k in April, 75k in March, 190k in February and 109k in January.
The construction sector added 64k but manufacturing shed 48k.
Small and medium sized businesses contributed all of the jobs as those with 500+ employees lost 106k jobs.
Wage growth moderated again with ‘job stayers’ seeing 6.5% increases vs 6.7% in April. ‘Job changers’ saw a 12.1% jump in wages, though down from 13.2% in April.
Bottom line, while the headline figure looked great, the service sector net hiring was very mixed with bad breadth and that natural resource/mining job gain was out of the ordinary. Manufacturing firing’s reflect the recession in that area of the economy.
Challenger’s May layoff report saw a 20% rise in layoffs m/o/m and up by 287% y/o/y. They said “Consumer confidence is down to a 6 month low and job openings are flattening. Companies appear to be putting the brakes on hiring in anticipation of a slowdown…With the exception of Education, Government, Industrial Mfr’g, and Utilities, every industry has seen an increase in layoffs this year.” Tech and retail led the way in job cuts.
Initial jobless claims totaled 232k, 3k below the estimate and vs 230k last week. The 4 week average was 230k vs 232k in the week before. Continuing claims rose 6k w/o/w to just under 1.8mm at 1.795mm, about as forecasted.
Bottom line, we have plenty of mixed signals on the labor market ahead of tomorrow.
Initial Claims 4 week avg
Continuing Claims