Is the Economy Hitting a Soft Patch?
Recent reports are suggesting the economy, which had been robust in recent months, has softened a bit recently.
For instance, this morning, ADP reported private payrolls added 213,000 jobs in January. That was lower than analysts had expected, and below the 241,000 reported last month. That’s still a solid number, but it’s been down for two months in a row, said Bob Hughes, senior research fellow at the American Institute for Economic Research. ADP, a payroll processing firm, releases its data in advance of the monthly jobs report by the Bureau of Labor Statistics, which comes out on Friday. Over the last 12 months, BLS reported an average of 238,000 new jobs per month.
Meanwhile, Autodata reported this week that in January, automobiles were selling at an annual rate of 16.7 million. With a better job market, lower gas prices and better consumer confidence, it makes sense auto sales continue to show strength, Hughes said. But he noted that this metric, too, was down for two months in a row.
And on Monday, ISM reported slower manufacturing for the second month in a row.
Overall, it suggests the economy may be hitting a bit of a soft patch, Hughes said. “The data was pretty strong a few months ago, so you would expect things to ease back a little, and they are,” Hughes said. “It’s always worth monitoring soft patches to make sure they don’t become a more serious slowdown.”