June 2019 ADP Jobs, ISM Non-MF

Robert A. Dye, Ph.D.


Daniel Sanabria

A man using a welder in a workshop wearing a welders mask

The ADP employment report for June showed a weaker-than-expected gain of 102,000 net new private sector jobs. May numbers were revised up from +27,000 to a...

Slew of Data Consistent with Slower GDP Growth for Q2

•The ADP Employment Report for June showed an increase of 102,000 private sector jobs.
•The ISM Non-Manufacturing Index fell to a still-positive 55.1 in June.
•Mortgage Applications eased in late June as refi activity cooled.
•Initial Claims for Unemployment Insurance fell by 8,000 for the week ending June 29, to hit 221,000.
•The U.S. International Trade Gap widened in May to -$55.5 billion, with strong imports. 

The ADP employment report for June showed a weaker-than-expected gain of 102,000 net new private sector jobs. May numbers were revised up from +27,000 to a still-weak +41,000. Two months of tepid growth in the ADP employment survey is putting the focus on the job market heading into Friday’s official Bureau of Labor Statistics Employment Report. According to ADP, small businesses (less than 50 employees) shed a net 23,000 jobs in June. Medium-sized businesses (50-499 employees) added a solid 60,000 jobs. Large businesses added 65,000. The construction sector lost 18,000 in June. Natural resources/mining gave up 4,000. Manufacturing gained 7,000 net new jobs. Leisure/hospitality was weak, adding just 3,000 jobs in June.

The ISM Non-Manufacturing Index for June eased to a still-positive 55.1 indicating moderate ongoing expansion for the nation’s service sector. This is the weakest ISM Non-MF number since June 2017. As we see in the ISM Manufacturing Index, the ISM Non-Manufacturing Index is also trending down. In June, nine out of ten sub-indexes were positive, including business activity, new orders and employment. Imports were neutral for the month. Anecdotal comments were mixed, with concerns expressed about trade tariffs. Sixteen out of seventeen industries reported growth, only arts and entertainment reported contraction.

Initial claims for unemployment insurance fell by 8,000 for the week ending June 29, to hit 221,000. This is still a very low level, but it has been creeping up after a late-April trough. Continuing claims also dropped by 8,000 for the week ending June 22, to hit 1,686,000, also still a very low level.

The U.S. international trade gap widened in May to -$55.5 billion as imports surged. Imports increased by $8.5 billion with gains in automotive, industrial supplies and capital goods. Exports increased by $4.2 billion for the month with increases in capital goods, consumer goods and foods. Despite tariffs, the U.S. trade balance is still fighting the headwinds of a strong dollar and a cooler global economy. With two months of data, trade is looking like a small positive for Q2 GDP growth.

Total mortgage applications eased by 0.1 percent for the week ending June 28 as refi apps dipped by 1.2 percent. Purchase apps increased by 1.1. On a four-week moving average basis, refi apps were up by 90.3 percent over the previous year, fueled by lower mortgage rates. Purchase apps were up by 8.4 percent for the year. According to the Mortgage Bankers Association the rate for a 30-year fixed-rate mortgage notched up to 4.07 percent. The housing accelerator remains disengaged in this business cycle. 

Market Reaction: U.S. equity markets opened with gains. The yield on 10-Year T-bonds is down to 1.95 percent. NYMEX crude oil is up to $56.39/barrel. Natural gas futures are up to $2.27/mmbtu.

For a PDF version of this report, please click here: June 2019 ADP jobs, ISM Non-MF.

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July 3, 2019
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist

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