Employment Index Notches Largest Gain Ever

The monthly ADP National Employment Report released this morning, which measures non-farm private employment, shows June 2006 sporting the biggest month-to-month job gain in the 5-year history of the index.  The report states seasonally adjusted employment grew by 368,000 over the previous month.

The Department of Labor will release its June numbers of Friday, officially forecast to show a gain of 160,000 jobs in June.  The ADP report is often an early bellwether of either an upside or a downside surprise in those Labor Department numbers.

Following last week's upward revision of 1st quarter GDP growth to a ripping 5.6%, this is more evidence running counter to the Fed's insistence that the economy is "moderating".  What's more, the fact that this measure is focused on a far more recent time period means it reflects a couple more rate hikes than the GDP figure.  That should've meant we'd see additional softening, not resilient expansion.

That's both good and bad news if it means Bernanke is likely to continue hiking rates until the economy decides to cooperate and show consistent evidence that it actually is moderating.  For now, we may simply have to suffer the stubbornness of an economy that just won't quit.  So long as inflation doesn't become problematic, I say let it grow, let it grow, let it grow.