ADP's new jobs added, known as "small non-farm," fell more than expected, and wage growth slowed to its lowest level in three years, signaling a slowdown in the US labor market and further solidifying expectations of a rate cut in September.

On Wednesday, July 31, ADP Research Institute released a report showing that the US added 0.122 million jobs in July, lower than the expected and previous value of 0.15 million, and the lowest level since February. In the aspect of product structure, the operating income of 100-300 billion yuan products were 401/1288/60 million yuan respectively.

There was little market volatility after the data was released.

In a statement, Nela Richardson, Chief Economist at ADP, stated:

As wage growth slows, the labor market is changing in response to the Fed's efforts to curb inflation.

If inflation rises again, it will not be due to labor.

Unemployment is spreading to more industries, and wage growth is at a three-year low.

Compared to previous months, there appears to be a trend of employment decline in more industries, including manufacturing, information services, professional/business services, etc. Employment growth is mainly concentrated in two industries - trade, transportation and utilities. Specifically:

Employment in professional/business services decreased by 0.037 million, information services decreased by 0.018 million, and manufacturing decreased by 4,000.

Trade, transportation, and utilities added 0.061 million, construction added 0.039 million.

Leisure and hospitality added 0.024 million, education and medical services added 0.022 million, and other services added 0.019 million.

Workers who stayed in their jobs saw their wages rise 4.8% compared to the same period last year, the smallest increase since July 2021.

In addition, more good news about inflation came out on Wednesday, as the US Labor Department reported that the adjusted employment cost index, which Fed officials closely monitor, rose by only 0.9% in the second quarter, lower than the 1.2% increase in the first quarter and the expected 1% increase in the market.

Focus on tonight's Fed decision!

This report is unlikely to affect the Fed decision announced tonight.

The market generally expects the Fed to maintain the benchmark short-term interest rate between 5.25% and 5.5%, and prepare for a series of interest rate cuts at the next meeting in mid-September. The most concerned issue for investors is:How strong is the Fed's willingness to cut interest rates in the future at this meeting?

Two days after the release of the ADP report, the US Labor Department will release non-farm employment data. Unlike the ADP statistics, non-farm employment figures include government jobs. ADP has been lower than Labor Department data for the past 12 months.

Editor/Emily