CNBC Daily Open: Divergence between official and ADP jobs reports reveals two labor markets
Apologies in advance to the good folks at ADP, who I'm sure are doing good work processing private payrolls. But we might want to keep in mind the above warning when assessing the monthly ADP jobs report.
Official labor numbers from the U.S. Bureau of Labor Statistics showed a higher-than-expected increase of 147,000 jobs in June. The ADP report, released Wednesday, pointed to a decrease of 33,000 private sector jobs.
That's not just a difference in magnitude, but also of direction. Emphasizing this point, the unemployment rate in June fell to 4.1% from 4.2% in the month before, defying a forecast for an increase to 4.3%.
The details lurking below the official jobs report, however, suggest I could be a tad unfair to the ADP report.
Jobs in the government rose by 73,000 in June, making up around half of the total nonfarm payroll growth for the month, as noted by CNBC's Alex Harring. The ADP report only measures private payrolls — which exclude government jobs.
"The headline job gains and surprising dip in unemployment are undoubtedly good news, but for job seekers outside of healthcare & social assistance, local government, and public education, the gains will likely ring hollow," wrote Cory Stahle, economist at Indeed Hiring Lab.
The huge divergence between the ADP and BLS reports, then, might not be that much of a statistical aberration — and could point to a growing schism in the U.S. labor market.
The U.S. economy added more jobs in June than expected. Nonfarm payrolls increased a seasonally adjusted 147,000 for the month, higher than the estimate for 110,000. The unemployment rate also ticked down to 4.1% from 4.2% in May.
The S&P 500 and Nasdaq Composite notch new records. Both indexes rose Thursday to extend their streak of new closing highs. Yield on the 10-year U.S. Treasury jumped. On Friday, Asia-Pacific markets traded mixed.
Indian regulator temporarily bans Jane Street from market. The Securities Exchange Board of India accused the U.S. firm of widespread market manipulation, and issued an interim order to freeze millions of dollars in "illegal gains."
Trump's massive bill passed by U.S. government. On Thursday, the House of Representatives voted in favor of the tax-and-spending bill, with a finally vote tally of 218-214. The passage of the bill is a major political victory for U.S. President Donald Trump.
[PRO] A relief to European renewable energy firms. Amendments in Trump's bill gave renewable stocks a boost and could mean the "worst-case scenario" for the sector might not come to pass, an analyst said.
A year after its landslide win, Britain's Labour Party is navigating a tougher-than-expected path
The last 12 months have been nothing short of tumultuous for British Prime Minister Keir Starmer.
The government's main mission was to kickstart growth and make people better off. But a year on, business optimism, productivity and job creation remain muted — pressured, in part, by a rise in the national living wage and employers' national insurance contributions.
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