ADP just gave Warsh permission to hold in September. I don't think he's going to use it.

ADP printed this morning at 38,000 private sector jobs for August against 47,000 expected. Manufacturing shed 17,000 outright. The prior month was 44,000 and got revised up slightly to 46,000, so two consecutive months of historically weak private payrolls, and this one is the softer of the two.

For context, those numbers would have been alarming in a normal year. July's official government payrolls came in at -23,000. If ADP is tracking anything real, the private sector added somewhere between 35,000 and 45,000 jobs for two months running while the headline number was actually negative. That is not a labor market that needs to be restrained.

And yet.

ISM Manufacturing prices paid sat at 71.1 in August, unchanged from July. Both months came in at a level that signals significant input cost pressure. JOLTs job openings fell to 7.27 million and the quits rate slipped to 1.9%, below the 2.0% level economists watch as a threshold for sustained labor cooling. Base pay up 3.2% year over year, which is still below CPI at 3.4%, meaning real wages are negative for the fourth or fifth month running depending on how you count.

So the labor market is giving you weak job creation, a falling quits rate, and real wages that are still being eaten by inflation. That is textbook cover for a hold.

Here is where I keep getting stuck.

Warsh said at Jackson Hole last Friday that he would be hard pressed to describe financial conditions as restrictive. He said 54% of the PCE basket is running above 3% inflation. He said he is committed to a discipline, not a decision, which means he is not telling you what he will do in September. But he also said, pretty plainly, that the thing he needs to see is inflation actually moving to the target, not just a good print or two.

The labor side of the mandate is giving him permission to hold. He told you the labor side is not what he is primarily watching.

ISM Services prints at 10 this morning and the prices sub-index is the number I am interested in. Manufacturing prices paid at 71.1 for two straight months is hot. If services comes in with the same signal, the hold argument from ADP stops mattering and September is a coin flip regardless of Friday's payrolls number.

The other thing sitting in the ADP release that I have not seen anyone pull out. Base pay for job-changers is up 4.7% and gross pay for job-changers is up 7.3%. Job-stayers are at 3.0% base and 4.4% gross. That gap between stayers and changers is wider than it was a year ago. People who move jobs are still getting paid well to do it. That is not a labor market in distress, it is one where the distress is uneven and the headline is masking it.

The thing I cannot resolve is whether any of this actually moves September or whether September was already decided at Jackson Hole. Warsh said what he said. The data since then has been uniformly soft on jobs and sticky on prices. That combination, if it holds through Friday, gives him the argument for a hold and the argument for a hike in the same week, and he has told you he will not tell you which way he is leaning.

I keep landing on hold at about 60% and I do not fully trust it.

Talk me out of it.