Given how dark it got in the dark days of the pandemic when everything all but stopped, it should not be a huge surprise that mutterings of ‘inflation’ on Q1 conference calls a year on, are more of a cacophony of Hairy Maclary and Scarface Claw stuck-up-a-tree type proportions. Use of the word is up 800% according to analysts. And yet, the core measures of inflation watched by the beady eyes at the central bank remain as subdued as Blitzer Maloney having a scratch in the strawberry patch. Inflation might be rife but the rampant goings on seen in the commodity cohort from lumber to corn, or across heavyweight consumer goods companies from Kimberley Clark to Proctor & Gamble, is seen as nothing but transitory. And cross some fingers. Whilst supply chains have been upended and the freight market tightens beyond even the wildest imaginings of any large ship owner, what matters for those at the cooler end of the inflation debate is wage inflation. Pay-packets. And this week – drum roll – it’s payroll week. A chance for economists to update their models and continue to make bold forecasts about the future. Expectations are for further gains. Big gains. Possibly another million or so people are expected to be back in work as the travel and leisure industries come back to party with a vengeance. God bless the vaccine makers. Expectations are for more gains in the coming months, with more millions to follow the million or so this month. That is why some economists are calling for unemployment to be back down to a sizzling pre-pandemic 3.5% by year-end. People back in work is good for pretty much everyone bar the family dog, but one company that sharpens into focus when talking payrolls is ADP, the market leader in the buzzy world of Human Capital Management. The company was long perceived to be a dusty payroll processing provider but is one that is embracing technology and is fast evolving into an operation, offering data as a service, on demand payroll functionality and, importantly, a customer focused all-kicking app. As a business it may not be a go-go cyclical, or a go-go growth, but for those investors happy with steady growth, year in year out, courtesy of a $125bn steady growth industry backdrop – wage inflation or no wage inflation – the recent COVID employment hit offered a very decent ‘in’ price for a compounding, industry leader.


The securities mentioned in this blog may be held by funds managed by Majedie Asset Management Ltd.