Ahead of the U.S. Labor Department's jobs report on Friday, ADP Employer Services predicts that private employers added 150,000 positions for June. But two experts take issue with ADP's calculation. David Wyss, chief economist at Standard and Poor's, and John Silvia, chief economist at Wachovia, joined "Power Lunch" to discuss their weaker job views -- and what they think the Federal Reserve will do about them.
Silvia predicts that only 135,000 jobs were added for June. He told CNBC's Sue Herera that "We do not use the ADP numbers" in making calculations, relying instead on a blend of jobless reports and "help-wanted advertisements data."
He believes that America now has "two very different labor markets," and foresees employment gains primarily in the services sectors -- as globalization continues to alter the structure of the manufacturing sector.
Silvia said that even if the jobs number is closer to his outlook than ADP's, 135,000 is "still within [the Fed's] range." He augurs that the Fed will stay on hold for the remainder of 2007.
Wyss has an even more anemic June employment-growth figure, calling for 120,000 new jobs. But the economist noted that the ISM non-manufacturing number had risen to 60.7 for June from May's 59.7; given that "and the ADP number, odds are I'm too low," Wyss conceded.
Wyss declared that the ADP number is not necessarily accurate or useful month to month, but it is nevertheless an important indicator. And he advises watchers to hold off long-term judgement until the annual revision is enacted. "last year, the annual revision added 1 million jobs," he pointed out. Wyss agrees that there will be "no [Fed interest rate] move in the next six months."