This post originally appeared on The Basis Point: ADP private jobs report shows strange but strong U.S. economy
2020 election season is in full swing, so soon enough everyone will have Really Smart Opinions about the economy. If you want to be the person who can say “Well, actually…” at every water cooler election conversation, brush up on economic data points like the ADP private jobs report.
We’re here to translate the latest data on your behalf. We want you to come strapped to all your future economic debates.
ADP PRIVATE JOBS REPORT, JULY 2019
ADP is a massive payroll processor that handles paychecks for millions of American workers. It uses its internal data to estimate how many jobs the U.S. economy adds in a given month.
It serves as a predictor and a second opinion to the U.S. government’s own jobs numbers, which come out the following Friday. Here are the goods:
– The U.S. added 156,000 jobs in July 2019
– 78k of those jobs were in companies with 500 or more employees
– 146k jobs were in the service sector (as opposed to goods-producing)
– 15k construction jobs were added, which is a good sign for homebuilding
– If you dig into the historical data, we actually have around as many construction jobs right now (around 7.5m) as in January 2008, before the financial crisis
– Further on that note, construction jobs numbers have been at 11-year-highs in April and July 2019
WHAT DOES THIS MEAN FOR THE ECONOMY?
As we’ve noted before, the economy is in a weird place. There are 7 million job openings, but businesses aren’t hiring like there’s no tomorrow, according to the ADP private jobs report.
The conventional economic wisdom says employers are looking for workers with skills the workforce at large doesn’t have right now.
This is leading to slight wage increases as employers compete for top talent. The data is proving this, as personal incomes rose 0.4% in June.
People are turning around and putting that money back into the economy, too. Consumer spending is powering U.S. economic growth. Inflation is also weak, so increased spending has even more of an impact.
But how does the ADP private jobs report tie this back to your workplace election debates? When people and politicians try to score points on the economy, according to traditional metrics, things are going well. Not as well as they could be, given the record number of job openings, but things look fairly normal otherwise for an economy deep into a record expansion.
That’s not to say there aren’t problems in the way automation is changing the workforce and economy.
We’ll keep tracking all this so you can still sound smart no matter how much things change.