US LABOR MARKET: Waller's Speech Hints At Further Weakness In Private Payrolls

Fed Gov Waller's speech Thursday arguing for a 25bp rate cut in September and "additional cuts over the next three to six months" makes the case largely on the basis of risks to the labor market. In this context, he says "I tend to focus on the private sector as a better indication of the underlying momentum in the labor market", and the speech contains an intriguing footnote in saying that after getting the Sep 9 benchmark revisions that "private-sector employment actually shrank, on average, in the past three months": 

• The footnote: "I also look at timely data that Federal Reserve staff maintains in collaboration with the employment services firm ADP to construct a measure of weekly payroll employment, which covers about 20 percent of the nation's private workforce. This measure is comparable to the one ADP publishes. The current May–July contour for the staff measure of ADP-based private employment is broadly consistent with that of the Current Employment Statistics numbers. And in the weeks after the July jobs report's reference period, preliminary estimates from ADP show continued deterioration."
• The Fed has long collaborated with ADP as a way to experiment with using timely big data from private sector sources but they don't make their internal analysis public regularly, so this is a bit of an interesting insight into underlying deterioration that may only become clearer in the upcoming ADP report (if not the nonfarm payrolls report itself). A Fed article on the topic from 2019 is here.
• Current consensus for August ADP employment (out on Thurs Sep 4, a day ahead of NFPs) is for 60k gains, after 104k in July (which had been an upside surprise vs 76k consensus); nonfarm private payrolls are seen rising 75k after 83k. There are only a handful of ADP estimates so far and all appear to have been made before Waller's speech, and we wonder if consensus will shift even lower to reflect this observation.