INDICATOR: May ADP Private Sector Job Estimates
KEY DATA: ADP: 135,000; Manufacturing: -6,000; Small: 58,000; Medium: 39,000; Large: 39,000
IN A NUTSHELL: "It just may be that some on the Fed are celebrating the economic recovery too soon as job gains seem to have slowed."
WHAT IT MEANS: With the tape(r) worm eating at the insides of some of the inflation hawks at the Fed, the concern I have expressed is that the economy is still not strong enough to warrant a cut back in Fed policy. As long as fiscal policy remains restrictive and tax increases cut into spending, it is hard to see where strong growth is going to come from. A warning that the spring slump may be on us was seen in ADPs estimate of private sector payroll gains in May. They were disappointing, to say the least. Negative effects of sequestration might be reflected in the manufacturing payroll cut back. Reduced defense spending was expected to hurt manufacturing and that just might be the case. That is not to say the services sector was strong, it wasn't as only 138,000 new workers were added. That needs to be at 200,000 or more if we are to have solid gains. Also, while large employers are pulling their weight, small and especially mid-sized firms are being very cautious in their hiring and that is not good news.