ADP: Getting Better but Far from Great

This month's release of the ADP payroll report showed that private employers cut 473K jobs during the month of June. This was the fourth straight monthly improvement from March's low of -736K. While many of the market/economic indicators we track have returned to their "Pre-Lehman" levels, the ADP employment report is still 205K below its September 2008 reading of negative 268K.

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Comments

[Mad Hedge F...:]

Expect these numbers to stay bad for a long time. I spent the evening with Dr. Janet Yellen, the president of the Federal Reserve Bank of San Francisco. She thinks that thanks to the government’s tax cuts and spending programs, we will be out of the recession by the end of this year. After massive inventory liquidation, the auto industry in particular is poised for a rebound. Financial markets are now in better condition than we imagined possible six months ago. However, the pace of the recovery will be frustratingly slow, and it could take several years to return to full employment. Since the majority of the Fed board members feel that inflation will be stuck at 2% for years to come, deflation presents a greater risk than inflation. We are not by any means out of the woods yet. Rising energy prices and interest rates are a potential drag on the economy. Commercial real estate is at the top of her worry list, as falling rents and capital values could create a downward spiral, further impairing the banks. China’s wishes for an alternate reserve currency are impractical. Answering questions as only a UC Berkeley professor can, she further confirmed my belief that we are looking at an “L” shaped recovery at best. However, she did pour some cold water on my idea that the TBT has further to run. “Inflation running up to untoward levels doesn’t make any sense,” she averred.

Jul 01 11:39 AM

[Old Trader:]

I sometimes wonder why so much attention is paid to the numbers released by ADP, given that for a while now (a year, or more), they seem to be widely at odds with the "official" numbers, more often that not. I understand there's a different methodology used by ADP, compared to DoL numbers, but still....

Jul 02 05:31 PM