Preview: Due July 2 - U.S. June ADP Employment - A third straight sub-100k gain
We expect a rise of 50k in June’s ADP estimate for private sector employment growth. This would be stronger than May’s 37k but a third straight gain of significantly below 100k. ADP underperformed the non-farm payroll significantly in April and May. We expect a more modest underperformance in June, with payrolls to rise by a slower 75k both overall and in the private sector.
With initial claims moving significantly higher since mid-May, a slowdown in employment growth looks likely, though we do not see the initial claims data as rising sharply enough to signal significant job losses, and thus expect ADP data to show a third straight month of weak growth while payrolls move towards the slowing already seen in ADP data.
The recent contrast between ADP and non-farm payroll data has been led by education and health, which has fallen in the last two ADP reports while continuing to lead growth in non-farm payrolls. Education and health is likely to remain inconsistent between the two series, even if the gap narrow. We expect slowing in the non-farm payroll to be broad based.
