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With official economic data delayed once again by the brief government shutdown, once again we must rely on private sources to at least sketch the contours of the economy.

This morning, we got two important portions of that sketch. First, the ADP private employment report indicated an increase of only 22,000 jobs in January (blue), with only 1,000 of those in the goods-producing sector. Within that sector, manufacturing shed another 8,000 jobs (red), while construction added 9,000 (gold):
 

In the past year, only 280,000 private sector jobs have been added in total in the entire economy, an average of only 23,000 per month. The construction sector added 43,000, while manufacturing declined every single month and lost a total of -159,000.

But if the first report of the morning confirmed a moribund, if not outright contracting, employment sector, the other news, in the ISM services report, showed that the 75% or so of the economy that is that sector continued steady if not strong expansion. The headline number was unchanged at 53.8, while the three-month average was 53.4 (recall that any number above 50 means expansion) [Note that in each graph below, I also show the equivalent sector reading from the ISM manufacturing report earlier this week in gray]:

New orders decelerated -3.4 to 53.1, with a three month average of 54.2:
 

Employment also decelerated by -1.4 to almost a complete halt at 50.3, while the three month average also came in at 50.3:
 

Note that the ISM manufacturing and services reports are in almost complete accord with the ADP private payrolls report. Both showed weak, but positive, employment growth in the services sector, while the nearly stagnant goods sector and contraction in manufacturing in the ADP report was similar to the continuing contraction indicated earlier this week in the employment reading from the ISM manufacturing report.

Finally, prices paid increased 1.5 to 66.6:
 

The (relatively) good news is that this is still well below the readings from earlier last year. The unequivocal bad news is that prices paid in both the manufacturing and services sectors showed marked increases over the course of the last year. In other words, inflationary pressures have been building in the pipeline at the same time as employment growth has stalled.

Finally, here are the three-month averages for both the headline and new orders indexes, economically weighted at 75% for services and 25% for manufacturing:

Headline: services 53.4, manufacturing 49.5 -> economically weighted average 52.4

New orders: services 54.2, manufacturing 50.6 -> economically weighted average 53.3

Recall that I use this economic weighting as a short leading forecast for the economy as a whole, and needless to say, this indicates that a steady if not strong expansion is likely in the next few months, despite the weakness in the jobs environment.

And speaking of jobs, when the official January report is released, I will be looking for a continued stall or even decline in goods-producing jobs, but also an increase, if a lackluster one, in service-providing jobs. Note that the report will also include adjustments to last year’s numbers as well.

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