ADP spreads Gloom

The figures for May employment from ADP came out this morning. To put it mildly, the numbers were horrible. According to the ADP figures, the private sector added 38,000 jobs in May compared to 268,000 in April. "Experts" had predicted an increase of 175,000 for the month, so the actual figure came in about 140,000 jobs below the prediction. If you couple this number with the weekly numbers for new unemployment claims which have been running at a six month high, you get a picture of a US jobs market that is not even coming close to producing sufficient jobs to cut unemployment. Indeed, numbers like these will likely lead to a rise in unemployment.

In recent weeks, much has been made about the unexpected nature of the economic data. The so-called "experts" have been predicting better numbers for all sorts of economic data. Also today, the Institute for Supply Management said that U.S. manufacturing activity expanded in May at the slowest pace in 20 months, thanks in part to a sharp rise in energy prices, another unexpected bit of bad news. The sad truth is that the experts tend to do well with their predictions so long as the economy is moving steadily in one direction. Generally, what the experts miss are the turns, the times when the economy either changes dierection or changes in the rate of growth in a major way.

Hopefully, the bad economic news will fade away as the cost of energy steadies and possibly declines a bit. If not, there will be a lot more distressing news ahead, and the "experts" are going to have to refine their predictions in a major way.