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Today’s labor market indicators show very good conditions for job seekers.



August 2018 ADP Jobs, ISM Non-MF Index, UI Claims

September 6, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Positive Data Show a Strong U.S. Economy

*     The August ADP Employment Report shows an increase of 163,000 private sector jobs.
*     The ISM Non-Manufacturing Index for August increased to a strong 58.5.
*     Initial Claims for Unemployment Insurance fell by 10,000 for the week ending Sept. 1, to hit 203,000.

Today’s labor market indicators show very good conditions for job seekers. The August ADP job report posted a moderate increase of 163,000 private-sector payroll jobs for the month. Tomorrow we will get the official Bureau of Labor Statistics job count for August. According to ADP, medium sized businesses (50-499 employees) did the bulk of the hiring in August, adding a net of 111,000 jobs. Large businesses added 31,000 and small businesses added just 21,000 net new jobs for the month. The manufacturing sector is still adding jobs, up 19,000 in August. Construction added 5,000. Services industries increased payrolls by 139,000. Government workers are not included in the ADP numbers. If we add about 5,000 to the 163,000 total for ADP, that gives us a reasonable guess of around 168,000 for the official BLS job count tomorrow.

The ISM Non-Manufacturing Index increased in August from 55.7 to 58.5. As previously reported, the ISM Manufacturing Index also showed a healthy increase, to 61.3 for the month. The combination of two strong ISM indexes for August is a very good indicator for the U.S. economy, consistent with ongoing moderate-to-strong GDP growth through the third quarter. The production, employment and new orders sub-indexes for the ISM Non-MF Index all improved in August. Fourteen out of 16 industries reported expansion for the month, only mining and forestry reported contraction. Anecdotal comments were positive, but show that some businesses (construction, information and mining) are very concerned about the impact of tariffs on prices.

Initial claims for unemployment insurance dropped by another 10,000, to hit 203,000 for the week ending September 1. This is the lowest level for initial claims since December 6, 1969. A downside breakout of UI claims from the already-very-low levels from mid-year is truly exceptional. Continuing claims dipped by 3,000 for the week ending August 25, to hit 1,707,000.

Market Reaction: U.S. equity markets were mixed at the opening bell. The yield on 10-Year T-bonds is up to 2.90 percent. NYMEX crude oil is up to $68.74/barrel. Natural gas futures are down to $2.78/mmbtu.

For a PDF version of this report, click here: August 2018 ADP Jobs, ISM Non-MF Index, UI Claims

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