Source: Jin10 Data
On Wednesday, the U.S. ADP employment report, also known as the "little non-farm payroll," showed that employment growth slowed in May due to a sharp decline in manufacturing. Recruitment in leisure and hotel industries also showed weakness.
In May, the U.S. ADP employment recorded an increase of 152,000 people, the smallest increase since January of this year, lower than the expected 175,000 people. The previous value was revised down from 192,000 people to 188,000 people.
After the data was released, the U.S. dollar index and spot gold fluctuated slightly. The two-year U.S. Treasury bond yield fell to a new intraday low, but did not fall below Tuesday's slight low point of just under 4.75%; the yield on the 10-year U.S. Treasury bond fell to 4.312%, the lowest level since April 5. The stock index futures widened their gains with S&P 500 index futures up 0.42% and Nasdaq futures up 0.73%.
Nela Richardson, chief economist at ADP, said that job and wage growth are slowing in the second half of the year. The labor market is solid, but we are monitoring obvious weaknesses associated with producers and consumers. Almost all recruitment comes from services, with commodity manufacturers contributing only 3,000 jobs growth.
The ADP report also showed that the year-on-year wage growth of job hoppers in May declined for the second consecutive month. The salary growth of job hoppers was 7.8%, while the salary of non-job hoppers remained stable for the third consecutive month, with an increase of 5%.
Looking at the detailed data,
In May, the employment in the construction industry increased by 32,000 people, an increase of 35,000 people in April; the median annual salary growth rate was 5.3%, while it was 5.9% in April.
In May, employment in the manufacturing industry decreased by 20,000 people, an increase of 9,000 people in April; the median annual salary growth rate was 4.7%, while it was 4.6% in April.
In May, the employment in the trade/transportation/utility industry increased by 55,000 people, an increase of 26,000 people in April; the median annual salary growth rate was 4.6%, while it was 4.7% in April.
In May, the employment in the financial services industry increased by 28,000 people, an increase of 16,000 people in April; the median annual salary growth rate was 5.1%, while it was 5.1% in April.
In May, the employment in the professional/business services industry decreased by 6,000 people, an increase of 22,000 people in April; the median annual salary growth rate was 4.8%, while it was 4.9% in April.
Although the employment figures released by ADP were lower than the median market expectations, they were still within the range expected by economists. The U.S. secured overnight financing rate (SOFR) only slightly decreased by one basis point after the release of ADP data, almost unchanged from the previous level.
Analysts believe that this report is the latest indication that employment has not retreated under the heavy pressure of the Federal Reserve to raise interest rates. However, other data shows that the job market is becoming more balanced.
Previously, the U.S. Labor Department reported on Tuesday that job vacancies fell to their lowest levels in more than three years in April, and the ratio of job vacancies to unemployed people has returned to pre-epidemic levels in early 2020. Ronald Temple, chief market strategist at Lazard Asset Management, said: "Increasingly, the evidence suggests that the Federal Reserve should start loosening policies."
Recent economic data, especially the slowdown in employment growth and the return of inflation data to a downward trend, has boosted investors' confidence in the Federal Reserve's interest rate cut before the end of the year.
However, UBS strategists believe that "the probability of the Federal Reserve cutting interest rates more than twice this year is small, and the worst-case scenario is still no interest rate cut, which means that the magnitude of rate cuts this year may be small."
The latest Reuters survey shows that most of the economists surveyed expect the Federal Reserve to cut interest rates for the first time in September, and there is still a possibility of only one or no interest rate cuts. Their expected median also shows that inflation remains high and is not expected to reach the target level of 2% until at least 2026.
Later today, the market will closely watch the May ISM non-manufacturing PMI in the United States, which will be released at 22:00 Beijing time. The strong momentum of the U.S. service industry has always been a major source of the Federal Reserve's concern about stubborn inflation.
Editor / jayden