Employment Gains Disappoint
I’m starting to feel a bit like the grim reaper this week as the downward trends continue. This morning the ADP report showed that private sector jobs rose by only 38,000 last month, much less than the downwardly revised 183,000 gain that was expected.
- Large businesses with 500 employees or more cut 19,000 new employees
- Medium-size businesses added 30,000 workers
- Small businesses that employ fewer than 50 workers added 27,000 new workers
- Service-sector jobs increased by 48,000
- Factory jobs fell by 9,000
Businesses drew down inventories, with the inventory index dropping to 48.7 in May from 53.6 in April.
On a positive note, price pressures eased with the prices index falling to 76.5 from 85.5 in April.
This data, coupled with the double-dip in housing reaffirms our belief that the Fed is unlikely to raise rates anytime soon. As one would expect, bond prices rose and yields dropped in response to this news, with the 10 year Treasury note dropping below 3%.
