The US automated data processing company ADP reported on Wednesday that private sector employment growth improved in March, and the increase far exceeded expectations.

The number of ADP employees in the US recorded an increase of 184,000 in March, higher than the forecast of 148,000, and higher than the previous value of 155,000. Driven by the leisure and hospitality industry, US private companies last month saw the biggest increase in recruitment since July last year.

According to CME's US Federal Reserve's observation tool, the probability that the Fed will keep interest rates unchanged in May is 99.1%, and the probability of cutting interest rates by 25 basis points is 0.9%. The probability that the Federal Reserve will keep interest rates unchanged until June is 37.1%. The probability of cutting interest rates by 25 basis points is 62.3%, and the probability of cutting interest rates by 50 basis points is 0.6%.

After the ADP employment data was released, the US dollar index rose 5 points in the short term, and spot gold fell by more than 7 US dollars in the short term. Institutional strategists said that US Treasury yields have been slow to respond to ADP employment data, but they seem to be responding now. The two-year US Treasury yield hit a daily high. USD/JPY surged to close to 152.

Judging from the disaggregated data:

The number of people employed in the manufacturing industry increased by 10,000 in March and by 60,000 in February; the median annual wage growth rate was 4.6%, compared to 4.8% in February.

The number of people employed in the construction industry increased by 33,000 in March and 28,000 in February; the median annual wage growth rate was 5.7%, compared to 5.5% in February.

The number of people employed in trade/transport/utilities increased by 29,000 in March and 24,000 in February; the median annual wage growth rate was 4.7%, compared to 4.6% in February.

The number of people employed in the financial services industry increased by 17,000 in March and 17,000 in February; the median annual wage growth rate was 5.3%, compared to 5.5% in February.

The number of people employed in professional/commercial services decreased by 80,000 in March and increased by 50,000 in February; the median annual wage growth rate was 5.0%, compared to 5.1% in February.

Employment growth has been strong in all industries, but the number of people employed in the professional services sector has declined; after several months of steady deceleration, the year-on-year increase in remuneration for those who have left jobs remained flat at 5.1%. Meanwhile, the wage growth rate of those who changed jobs rose sharply to 10%, for the second month in a row.

ADP chief economist Nela Richardson said that what was surprising about the March ADP data was not only salary growth, but also industries that recorded wage growth. The three industries that saw the biggest increase in the number of job changes were construction, financial services, and manufacturing. Inflation has been cooling down, but our data shows that wages in the goods and services sector are rising.

Macro strategist Cameron Crise said that ADP did not change the rules of the game, but the survey results showed an increase of 184,000 jobs, showing a strong side. This figure is higher than the estimated 150,000, and it is also the strongest figure since July last year. Coupled with the upward correction to the February data, this is yet another small evidence that the US economy continues to grow, which should continue to support the rise in US Treasury yields.

Later, Powell will speak at the 2024 Business, Government, and Society Forum hosted by Stanford Business School at 00:10 Beijing time on the 4th.

Editor/Somer