KEY DATA: ADP: +692,000; Hospitality: +332,000/ Pending Sales: +8%; Over-Year: +13.1%
IN A NUTSHELL: “The reopening of restaurants is driving the demand for labor and that should continue for a few more months.”
WHAT IT MEANS: On Friday, we get the government’s June employment report, so Wednesday of the same week means ADP releases its estimate of private sector payroll gains. It looks like we are in for another big increase. The largest gain, not surprisingly, should be in the leisure and hospitality, as restaurants and hotels are moving rapidly toward full service again. But that was not the only strong sector. Health care hiring soared as did construction. That was expected, though the health care rise was somewhat outsized. The job increases were also evenly split across firm size, which shows that the small business sector is coming back to life as well. Finally, the ADP estimate and the consensus of economists for Friday’s jobs report are very much in line. Either we are all wrong, a very real possibility, or for once we all got it right.
Spring was not the greatest time for home sales as inventory restrained activity. That may be changing. The National Association of Realtors reported that pending home sales rebounded in May and every region posted a solid rise. While demand remains strong, the improvement in sales may be coming from homeowners who cannot pass up the large rise in prices. Inventories are beginning to increase, though they are still way too low given the level of demand.