Monthly Labor Report Should Be Strong

The labor market is running hot. As you can see from the chart below, there were 742,000 private-sector jobs added in April according to the ADP report. This was the highest reading since last September. It was up from last month’s 565,000 but missed estimates by 43,000. This compares to estimates for 853,000 private-sector jobs added in this Friday’s BLS report.

Job creation was similar in each size category. Small firms added 235,000 jobs; mid-sized firms added 230,000 jobs, and large firms added 277,000 jobs. There were 106,000 goods-producing jobs added, with 55,000 coming from manufacturing. That’s strong in spite of the decline in the ISM employment index. Construction added 41,000 jobs. This is an extremely hot housing market. That area of the labor market is headed towards a shortage.

People formerly in the leisure and hospitality industry won’t want to switch careers now that the industry is finally picking up. The industry added 237,000 jobs according to the ADP reading. The 2nd best was trade, transportation, and utilities which added 155,000 jobs. Warehouse job creation is still strong. Online retail penetration has maintained its 2020 gains.

Another Solid ISM PMI With A Small Decline

The April ISM services PMI was similar to the manufacturing PMI in that the PMI fell from March, but was still very strong. The PMI fell from 63.7 to 62.7 which is the equivalent of 4.7% GDP growth. The activity index fell sharper. It was down 6.7 points to 62.7. The new orders index fell 4 points to 63.2. On the bright side, the employment index was up 1.6 points to 58.8 which supports the impending strong BLS report on Friday. Just like the manufacturing reading and basically every economic indicator, the prices index was up 2.8 points to 76.8.

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