ADP predicts solid jobs increase
Offset by weakness in goods-producing areas
The ADP National Employment Report predicts that the growth from previous months will continue in August.
ADP predicted an increase of 177,000 jobs in August. Most of these jobs come from the service-providing sector, with an increase of 183,000, followed by professional and business with 53,000, trade, transportation and utilities with 26,000 and financial activities at 15,000.
On the other hand, the goods-producing sector pulled against the increase with its drop of 6,000. Construction also showed a decrease of 2,000. Manufacturing came in flat.
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(Source: ADP, Moody’s Analytics)
Job openings for construction jobs are high today with hours worked at their highest ever, said Logan Mohtashami, AMC Lending Group senior loan manager.
In fact, San Francisco’s competitive employment market is causing many construction companies to lose workers and driving a trend towards more expensive housing.
That being said, ADP’s predictions have not proven to be very accurate over the past few months. After three months of striking out, could this be the month that ADP hits the target?
Last month ADP predicted an increase in jobs by 179,000, but the report came in much higher at 255,000. In June, ADP predicted a jobs increase of 172,000, right before the report came in at 287,000. Before that, ADP predicted an increase of 173,000, and the report came in at a shockingly low 38,000.
“If the ADP turns out to be off the mark and non-farm payrolls increase by 250,000 or more, as they did in both June and July, then a September rate hike would become a real possibility,” Capital Economics Chief Economist Paul Ashworth said.
“It is more likely that payrolls will come in below 200,000, however, which would probably persuade the Fed to hold off on the next rate hike until December,” Ashworth said.
Janet Yellen, Federal Reserve System chair of the board of governors hinted in her speech Friday that a rate hike in the near term is not off the books, and some speculate that it could come as soon as September.