ADP Unemployment Report Disappoints
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U.S. companies cut more jobs than forecast in August and boosted their workers’ productivity the most since 2003 in the second quarter, signaling employers are seeking to cut costs further even as the economy stabilizes.A survey by ADP Employer Services showed businesses reduced payrolls by 298,000 after a 360,000 decline in July. The Labor Department in Washington said productivity, a measure of employee output per hour, rose at a 6.6 percent annual rate in the three months through June.
Inflation Risks
“Inflation risks are minimal and the key issue they should focus on is spurring growth,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York, who accurately forecast the gain in productivity. “There’s a turn under way in the labor market, though it’s a very slow turn.”
Consumer Spending
The ADP report, forecast to show a decline of 250,000 jobs, underscores the danger that the consumer spending that accounts for 70 percent of the economy may be slow to gain traction in coming months.
Most economists agree with me that consumer spending will be a problem in the months ahead. The only difference is that I choose to focus on the likely negative effects of diminished consumer spending on our economy.
