ADP Employment Report – Released August 2nd, 2023 for July

The ADP Employment Report was released today.
Here's how it affected bond which, in turn, impacts mortgage rates.
Also not helping Bonds was a much stronger than expected ADP employment report for July, showing that there were 324,000 jobs created, higher than the roughly 190,000 expected. There was a negative revision to the monster 497,000 June figure, which was lowered by 42,000 to 455,000. The BLS said there were only 149k private sector job gains in June or 1/3 of the gains, so there is clearly a big disconnect. The goods sector added 21,000 jobs, led by natural resources/mining, but construction was pretty flat and manufacturing shed 36,000 jobs and has been showing job losses for several months. The service sector added 303,000 jobs, led by Leisure and Hospitality, which added 201,000 jobs after adding 232,000 in June. This compares with only 21,000 jobs in that space in BLS in June. Also for a 2nd month in a row ADP said leisure and hospitality drove the job gains with a rise of 201,000, following 232,000 in June. In comparison, the BLS said there were only 21,000 leisure/hospitality jobs that were added in June. ADP also reported that annual pay for job stayers increased 6.2% year over year, down from 6.4% in the previous report. Job changers saw an average increase of 10.2%, down from 11.2% in the previous report. While these figures are still high, they have been moderating and showing lower wage pressured inflation. Wages have now moderated for 13 months in a row and have cooled considerably from their levels of 8% on stayers and 16% on switchers last year. Bottom line, there has been a big disconnect between the ADP and BLS employment Reports. Even though ADP has a good sample size of 25M private payrolls, they may have a seasonal adjustment issue and these figures do not necessarily mean that Friday’s BLS Jobs Report will be as strong.