The stock market is on fire, but that doesn鈥檛 mean President Donald Trump鈥檚 ongoing trade war with China isn鈥檛 starting to do real damage to the U.S. economy.
Investors could ignore the economic warning signs for now, though eventually they will probably pay for tossing a blind eye to it. 鈥淭he fingerprints of the trade war were on this employment report, they are weighing on the economy,鈥 Moody鈥檚 Analytics Chief Economist Mark Zandi said on Yahoo Finance鈥檚 The First Trade. 鈥淕rowth is slowing because of the trade war and the uncertainty created by that. I think it will become more evident going forward.鈥
The report Zandi referenced is the June ADP employment figures released Wednesday. The U.S. private sector added a disappointing 102,000 positions in June, lower than the 140,000 positions Wall Street was predicting. Last month鈥檚 reading represented the smallest increase in private positions since the start of the economic expansion.
While larger businesses were adding, small businesses with fewer than 50 employees saw a drop of 23,000 positions. Meanwhile, businesses with 19 or less employees reduced payrolls by 37,000 positions.
The sector that continues to see weakness was the goods-producing sector, with construction falling by 18,000 positions. Within the services-producing sectors, leisure and hospitality added a meager 3,000 positions in June.
The ADP report joins a long list of reads on the U.S. economy 鈥 from a lackluster quarter for transport giant FedEx (FDX) to cooling ISM manufacturing results 鈥 that paint the economy in a less than stellar light.
鈥I don鈥檛 think the nominal truce President Trump and Xi agreed to this past weekend is going to reduce the uncertainty that many large companies face,鈥 Zandi cautioned. 鈥淎s long as they are uncertain what products are going to have tariffs, they are not going to be out there hiring people. So I think the trade war will continue to do damage to the labor market.鈥
Nevertheless, the S&P 500 powered to a record high Wednesday morning. Don鈥檛 get used to it bulls, the non-farm payrolls report out on Friday could be a doozy.
