The Automatic Data Processing (ADP) employment report was released before the opening bell Wednesday morning, showing that the private sector lost 298,000 jobs during August. Expectations called for a loss of 255,000 jobs, but the loss was better than the revised 360,000 jobs lost during July. A spokesperson for ADP noted a "gradual improvement in labor markets" because "monthly losses are diminishing." That said, the group did note that job losses are likely to continue for "several more months."
In addition to this news, Challenger Gray & Christmas reported that layoffs planned by major U.S. corporations fell 21% from July to August. The 76,456 layoffs in August were the second-lowest amount cut in 2009.
Here is my problem with the news (and it sounds like something I have said continually during the past few months): It is still bad news folks, 298,000 jobs were lost in the last month. While the losses weren't as bad as June, they were still job losses. Yes, there were less layoffs in August than in June, but there were still layoffs. So, let's not celebrate the fact that many people lost their jobs, even it there were less of them than a month ago.
Do I have a problem with the recent market rally? No, however, I am afraid that it was built on a foundation -- just like today's jobs reports -- of not-as-bad news that could eventually crumble. Is our current little "correction" just that or is it the beginning of the foundation falling apart?
Let's see if there is a continued downtrend, but I have a bad feeling that the gains made on the back of bad news could be falling apart. If this is the case, there could be quite the correction, especially given the fact of the media hype swirling around a potential September swoon. If the first two days of the month are any indicator, we could be in for a long one.
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