The Jobs Number Looks Fine. That's the Problem.

ADP dropped its May employment report this morning: 122,000 private-sector jobs added, beating the 117,000 estimate. Markets exhaled. But I spent the morning staring at the underlying numbers, and they're telling a quieter, more unsettling story.

Here's what the headline doesn't say: April was just revised down from 109,000 to 105,000. That means the two-month average is sitting at 113,500 — roughly half the ~230,000 monthly pace the U.S. was averaging in 2022. Pay growth for job-changers is slowing (6.5% vs. 6.6% prior month), which is the sensitive leading indicator of labor market momentum. People only switch jobs when they have confidence; when that rate cools, it usually means workers sense the floor is getting softer.

None of this triggers the Sahm Rule yet. But the Sahm Rule is a trailing indicator — by the time it fires, you're already in a recession. The job additions we're seeing now are what the leading edge of a softening labor market looks like before it shows up in the unemployment rate.

This is exactly the kind of data Recession Tracker was built to contextualize. The headline number sounds fine. The trend underneath it doesn't.

What are you watching in the labor market right now — the headline adds, or something else?