Read what Paychex said before this week's job data/More tells on the US consumer, including auto sales/Other

Ahead of the ADP report today, the employment component within the ISM services report (after the below 50 print in ISM manufacturing) and before the BLS jobs number Friday, lets go through what Paychex said in its earnings call yesterday. 

"While our new client volumes remained solid and in line and both client and revenue retentions were in line with our expectations, several factors, including our decision to wind down the ERTC program based upon the recent legislative developments on Capital Hill, continued moderation of employment growth within our client bases, and slightly lower realized rates, all combined to create headwind - a larger headwind than what we had anticipated in the quarter." I bolded for emphasis.

Here is more, "The macroeconomic and labor market remains challenging for small and mid sized businesses. A tight job market for qualified workers, reduced access to affordable growth capital, and inflationary pressures continue to be headwinds for small businesses. Our small business employment watch continues to show moderation in both job growth and wage inflation. But however, a relatively stable macro environment. The softening in hiring we started to see in the 2nd quarter continued in the third quarter. There is more choppiness in hiring across all customer segments and industries now. Our clients tell us they still can't find qualified employees and are not willing to hire just anyone at higher wage rates, especially in areas with recent minimum wage increases and aggressive legislative changes." I bolded, again. 

This all squares with what I pointed out yesterday, C&I loans outstanding are at the lowest level since September 2022 and small and medium sized businesses are very reliant on their banks. I keep hearing from some about the 'solid' US economy and I have to respond that its very mixed instead. Some pockets might be solid (travel/leisure, high end spend, government boosted facility manufacturing) but others are reflecting softness and combined is a very confusing, uncertain picture.