Private job additions
The Automatic Data Processing (or ADP) national employment report revealed that the private sector added 185,000 jobs in July on a seasonally adjusted basis. The latest report came out on August 5. Private job additions in July were below the consensus economist estimate of 210,000. Private job additions in June came in at 229,000, a downward revision from the prior estimate of 237,000.
ADP employment report
The ADP issues the National Employment Report (or NER) in collaboration with Moody’s Analytics. The ADP-NER report measures the monthly change, on a seasonally adjusted basis, in total US non-farm private employment. This report is based on actual payroll data of ADP’s 411,000 US clients.
The ADP data include only private non-farm payrolls, whereas the hiring data provided by the Bureau of Labor Statistics include both private and government payroll additions.
Highlights from the latest report
Mark Zandi, chief economist of Moody’s Analytics, attributed the slowdown in July’s private job additions to layoffs in the energy industry and lower job additions in the manufacturing industry. The manufacturing industry added 2,000 jobs in July, down from 9,000 in June.
Job additions were lower across other industries, including the construction industry, the professional and business services industry, the trade, transportation, and utilities industry, and the financial activities industry.
The service-providing sector was responsible for ~96% of total job additions in July. The goods-producing sector added the remaining 8,000 jobs in July, down from 13,000 in June.
Key takeaways for department stores
A healthy job market might induce higher consumer spending in the long term. The weakness in the July ADP private job additions data is a negative indicator for department stores like Macy’s (M), Nordstrom (JWN), and JCPenney (JCP). Macy’s and Nordstrom together make up 0.2% of the portfolio holdings of the SPDR S&P 500 ETF (SPY) and 0.8% of the First Trust Consumer Discretionary AlphaDEX Fund (FXD).
The data about initial jobless claims, which we’ll discuss in the next part of this series, also provides insights about the health of the job market.