Economist: ‘Job Market Is Losing Its Shine,’ ADP Survey Shows 67K Jobs Added
Moody’s Chief Economist Mark Zandi thinks there’s trouble brewing in the jobs market after a private survey from ADP showed only 67,000 jobs were added in November, far below many projections.
“The job market is losing its shine,”Zandi said in a statement, according to CNBC. “Manufacturers, commodity producers and retailers are shedding jobs. Job openings are declining, and if job growth slows any further unemployment will increase.”
The 67,000 jobs added by U.S. companies were barely half the gain of the previous month. Payroll processor ADP said manufacturers, construction firms and mining companies cut 18,000 jobs combined.
It typically takes roughly 100,000 or so new jobs a month to absorb population growth and keep the unemployment rate from rising.
November’s job gains are the fewest in six months and are far below what economists are expecting in Friday’s government employment report, which is expected to show an increase of 190,000 jobs. ADP’s figures don’t include government hiring and frequently diverge from the government’s official report.
Zandi argues that the tariff war between the U.S. and China is starting to affect sectors of the economy. The weak job data coincides with a continued contraction for manufacturing, which entered its fourth straight month of recession.
“The slowdown is more significant than I would have thought and I do think that goes to the trade war,” Zandi said in a conference call. “The trade war is doing damage to the economy and the jobs market.”
Even though the strike at General Motors had ended, goods-producing industries cut 18,000 positions in November. Trade, transportation and utilities also lost 15,000 jobs. Information services cut 8,000.
Friday’s government nonfarm payrolls report should reflect GM’s increase after the strike, which didn’t show in the ADP report, according to Zandi. He also expects to see around 10,000 government hires on Friday’s report, which he is projecting to land at around the 125,000 jobs added mark.
“The weakness in the ADP report does not guarantee a disappointment in the upcoming (government) data,” said Daniel Silver, an economist at JPMorgan.
But Silver said that the disappointing ADP report “is supportive of our view that the trend in job growth has downshifted lately.”
The Associated Press contributed to this report.