Private businesses rehire 2.37 million workers in June, ADP says

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Published Date 7/1/2020

ADP reported its private jobs data this morning. It was expected that jobs would increase 3.75 mil, jobs were less at 2.37 mil, but also as expected ADP revised May jobs from -2.76 mil to +3.07 mil. The initial reactions; the 10 yr note increased to 0.69% +3 bps from yesterday, and the DJIA index before the 8:15 am ET report was down 200 points then turned up and at 9:00 am +73 points in the futures markets. Fiscal and monetary stimulus helps the economy regain its footing. A gradual improvement in demand amid a pickup in coronavirus cases indicates the job market will take time to recover, but those looking for employment to crawl back the pre-corona virus will be greatly disappointed. There are permanent losses of jobs that won't come back, at least over the next two + years. 3% unemployment that we had can't be expected to return with businesses intent on cost-cutting in every aspect of their businesses; thousands of restaurants won't re-open in the new economy.

Service-provider employment climbed 1.91 million, while payrolls at goods producers increased 457,000 in June. The leisure and hospitality industry took on 961,000 workers, while construction firms added 394,000. In health care, employment rose by 246,000. Three industries -- mining, information, and management -- registered declines in payrolls. Payrolls at small businesses increased 937,000, and large businesses added 873,000 jobs. Medium-size businesses boosted payrolls by 559,000. 70% of the jobs added in June were in the leisure and hospitality, trade, and construction industries. The unemployment rate is expected to continue to fall from its April peak, but the size of that decline may be limited by Labor Department efforts to resolve a misclassification issue that has caused the rate to understate the true degree of joblessness.

Tomorrow's official BLS employment report will be difficult to navigate; the misclassification of out-of-work Americans as employed, as with the ADP data, makes a true picture somewhat cloudy. That said, any data that is better than forecasts will support the out-sized bullishness currently in all markets. Economists in May predicted 7.5 mil job losses, but according to BLS, it increased by 2.5 mil. Job growth (or losses) are not to be taken literally now.

At 9:30 am ET, DJIA opened +175, NASDAQ +46, S&P +17. 10 yr 0.69% +4 bps. FNMA 21.5 30 yr coupon at 9:30 am unchanged from yesterday and -1 bp frm 9:30 am yesterday.

Weekly MBA mortgage apps last week: the composite -1.8%, purchase apps -1.0%, and refinances -2.0%.

June PMI manufacturing index at 49.8 was in line with estimates, up from 39.8 in May (almost back to expansion at 50+). Eurozone's June Manufacturing PMI rose to 47.4 from 39.4 (expected 46.9). UK's June Manufacturing PMI rose to 50.1 from 40.7, as expected. June Nationwide HPI fell 1.4% m/m (expected -0.7%; last -1.7%), decreasing 0.1% yr/yr (expected 1.0%; last 1.8%). France's June Manufacturing PMI rose to 52.3 from 40.6 (expected 52.1). Italy's June Manufacturing PMI rose to 47.5 from 45.4 (expected 47.7). Spain's June Manufacturing PMI rose to 49.0 from 38.3 (expected 45.1). Swiss June procure.ch PMI fell to 41.9 from 42.1 (expected 48.3). Germany's June Manufacturing PMI rose to 45.2 from 36.6 (expected 44.6). India's June Nikkei Markit Manufacturing PMI rose to 47.2 from 30.8 (expected 37.5). South Korea's June Nikkei Manufacturing PMI rose to 43.4 from 41.3.

At 10:00 am ET, the June IMS manufacturing index expected at 49.0, hit at 52.9 back in expansion mode above 50.

Gold futures eased after reaching the highest in more than eight years, with a focus on the central bank release and warnings about the coronavirus pandemic.

Source: TBWS

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