U.S. July ADP Jobs Seen Rising 15,000, Led by Private Services

Q: With jobless claims dropping but ADP signaling a hiring slowdown, which metric is hiding the economy's true state?

Neither metric is really “hiding” the economy; they are measuring different sides of a labor market that looks cooler in hiring than in layoffs. The drop in initial jobless claims to 187,000 points to one clear fact: employers are not shedding many workers. Continuing claims near 1.8 million and an insured unemployment rate of 1.2% also suggest layoffs remain contained. That makes claims a strong real-time gauge of labor-market resilience. But ADP is capturing something different: the pace of new hiring. Its weekly Pulse data slowed for five straight weeks through July 11, with average gains of 15,000 jobs per week, and market estimates for the monthly July ADP report cluster around only 45,000 to 65,000. That fits a broader pattern of softer payroll growth, including June’s weak 57,000 nonfarm gain and downward revisions to prior months. So the more misleading signal would be reading low jobless claims as proof of a strong labor market. Claims can stay very low in a “low-hire, low-fire” economy where workers keep jobs but job seekers struggle to find new ones. Recent data on participation, long-term unemployment, and subdued hiring support that view. The truer picture is that the labor market is not cracking, but it is slowing. Claims say the floor is still firm; ADP says the ceiling for growth is lower. Right now, ADP is likely closer to revealing the economy’s softer underlying momentum, while claims are better at showing that deterioration has not yet become broad-based.

3 articles · Updated · continuumeconomics.com · Jul 28

15,000 jobs is the implied July ADP pace from weekly data through July 11, pointing to a slower private-sector gain ahead of the Aug. 5 release.
Private services are expected to account for all of the increase, with education and health leading again, though likely below June’s 48,000 ADP gain.
June’s ADP report rose 98,000 and beat private payrolls by 49,000, but economists now expect July private payrolls to outperform ADP by about 45,000.
Lower initial jobless claims suggest a firmer July nonfarm payrolls report, helped by a rebound in leisure and hospitality after a 61,000 drop in June payrolls.