A Contrarian Indicator As Business Activity Hits A 6.5 Year High

The February BLS report is expected to show 175,000 overall jobs created and 183,000 private sector jobs added. The ADP report came in much below that, disappointing economists. It’s anyone’s guess if this means the BLS report will disappoint. We think the jobs report will be decent because there are early signs the economy is starting to recover following the 3rd wave of COVID-19.

ADP showed private sector job creation of only 117,000 jobs which was below estimates for 165,000. That’s 66,000 below the estimate for private sector job creation in the BLS report. Within the report, small business job creation was the weakest at only 17,000. We think small business job creation will be very strong this summer as restaurants reopen. There will be a huge turnaround. In late 2020 and early 2021, people were raising money to keep restaurants open. This summer, you won’t be able to get a table at many popular restaurants because they will be so busy. They will be hiring like crazy very soon.

Mid-sized firms added 64,000 jobs and large firms added 44,000 jobs. The goods producing sector lost 13,000 jobs. Natural resources and mining actually lost 4,000 jobs. It’s possible that’s related to the poor winter weather in Texas. It’s tough to see this continuing because the oil & gas industry is starting a cyclical upturn.

The service providing industry added 138,000 jobs. Leisure and hospitality only added 19,000 jobs which isn’t much compared to what is to come. Texas and Mississippi just ended their mask mandates and health restrictions because of the decline in national hospitalizations. This should lead to growth in the leisure and hospitality industry starting as early as March. Education and health added 41,000 jobs which was the most out of any group. It’s great to see healthcare jobs coming back because it means people are getting elective surgeries again. Just because a surgery is elective doesn’t mean it’s not incredibly necessary.

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