US private employers shed 371,000 jobs according to figures released by ADP today. Expectations had been for a loss of 350,000. As this report was released two days before the employment situation summary that gives us the unemployment rate and the government’s official estimates for non-farm payrolls, it is a good proxy for what to expect on Friday.
On the whole, economic data has been surprising to the upside, making third quarter GDP risks mostly upside risks. The major exception here is consumer data: employment, personal income, and retail sales. Here the data has been weak.
Obviously, as I have indicated in previous posts, a new normal baseline level of output cannot be achieved until the employment picture and personal income stabilize. The ADP report indicates we are far from that point. GDP can only show an increase in the interim due to inventory changes, government spending, or decreased savings and increased consumer debt.