Private-sector payroll numbers for June are out this morning, courtesy Automatic Data Processing (ADP Quick QuoteADP - Free Report) , which reports these figures at the start of each month. In times like these, when analysts and market participants are looking for signs of deterioration in the economy with the specter of a couple more interest rate hikes possible from the Fed, we look for cooler-than-expected headline numbers.

This month, we have no such luck. ADP’s June came in more than double expectations: 497K versus 220K expected, and the highest single-month total since February of 2022. This ramps up from a downwardly revised 267K for May, which was still toward the high-end of the range of the past 10 months. Small businesses all by themselves beat estimates for the entire private sector for the month: +299K, followed by medium-sized (50-499 employees) companies at +183K. Large companies actually shed -8K, putting up a negative number for the second-straight month.

Not surprisingly, Leisure & Hospitality brought in by far the highest amount of new jobs for the month (which, being the summer, likely has some seasonality explaining some of this big upward surprise) at 230K. As we’re all well aware, during the economic crater that was the start of the Covid pandemic took out more Leisure & Hospitality jobs than any other sector, and the industry is still not back to where it was pre-pandemic. Construction jobs made up 97K in the private sector last month, and Trade/Transportation/Utilities reached 90K — both of which may be seen as part of the resurgence we’ve been seeing in new homes being built to satisfy housing demand.

Manufacturing did lose -42K positions in the private sector for June, and Information Tech lost -30K. Wage growth was down 20 basis points (bps) month over month to +6.4%, and those who changed jobs in the month, while still gaining on average +11.2% in wages, are now down for the 12th straight month. But none of these negatives are going to do much to shake this robust headline number; in the “good news is bad news” narrative, we must put this in the “Fed hikes rates further” column.

Initial Jobless Claims for last week were a tad higher than expected: 248K, which was 3K higher than consensus, and a clear step higher than the downwardly revised 236K the previous week. This is the highest weekly total since 265K a couple weeks ago, which itself was the biggest new claims total since October 2021. Continuing Claims sank to its lightest level since February of this year: 1.720 million, from the downwardly revised 1.733 million the previous week. This continues to point to the idea that those who have lost their jobs have found a new one in an uncommonly short amount of time. Or they’ve gone into business for themselves, which wouldn’t show up in these near-term figures so clearly.

After today’s open, we’ll get a look at new Job Openings and Labor Turnover Survey (JOLTS) numbers. Long “stuck” at more than 11 million job openings a year or so ago — back when a glut of openings were making the labor force a clear seller’s market, increasing opportunities for inflation to seep into the economy — we’re now expecting 10 million open jobs for May, down a tick from 10.1 million the previous month. Also, S&P PMI and ISM Services for June are expected to be flat to up for the month, both higher than the 50 threshold.

In any case, market participants are obviously starting to price-in that late-July Fed rate hike, and perhaps add the possibility of another hike at the September meeting (the Fed takes August off). This has caused pre-market futures to plummet from marginally red indices prior to the ADP and jobless claims reports to -287 points on the Dow now, -38 on the S&P 500 and -151 points on the Nasdaq. Tomorrow’s nonfarm payroll report is the most anticipated of the week, so there’s still a chance the employment situation is not as rip-roaring as evidence dictates this morning… but not a great chance.