Source: Wall Street See

On the eve of the release of the heavyweight non-farm payroll data, the ADP employment data supported by the "small non-farm" exceeded expectations, showing significant improvement compared to the previous month, indicating that despite some signs of weakness in overall employment in the usa, it generally remains stable.

On Wednesday, October 2nd, the ADP Research Institute collaborated with the Stanford Digital Economy Lab to release data showing that in September, the US ADP employment increased by 0.143 million people, better than the expected 0.125 million people, exceeding the forecasts of almost all economists from media surveys. The revised August value increased from 0.099 million people to 0.103 million people.

After experiencing a slowdown in growth for five consecutive months, the ADP employment numbers rebounded. The previous August ADP employment data was particularly bleak, hitting the lowest level since March 2023. However, it is important to note that despite the rebound in September data, the three-month average employment is still only 0.119 million people, one of the lowest levels since 2020.

Looking at different industries, employment from service providers accounted for 0.101 million people, while the rest came from employment by commodity producers. In specific sectors, job growth was fairly widespread, including:

The leisure and hospitality industry saw the largest increase in employment, adding 0.034 million positions, followed by construction with an increase of 0.026 million positions. Education and health services added 0.024 million positions, professional and business services added 0.02 million positions, and other services added 0.017 million positions.

The information services sector was the only industry to experience a decrease in employment, with a reduction of 0.01 million people.

Although the number of new hires increased, the wage growth rate once again declined. The wage growth for employees remaining in their current positions for 12 months slightly decreased to 4.7%, while the wage growth for job changers dropped to 6.6%, 0.7 percentage points lower than in August.

ADP Chief Economist Nela Richardson said:

Last month, the increase in hiring did not lead to an increase in wage growth. Usually, employees who change jobs see faster wage growth. However, the wage growth gap between those who switch jobs and those who stay in their original positions narrowed to only 1.9%, remaining at the low level we saw in January.

In terms of company size, all employment growth came from companies with more than 50 employees. Employment in small businesses decreased, with companies having fewer than 20 employees reducing by 0.013 million people.

After the USA ADP employment data exceeded expectations, the yield on US bonds saw an expanded increase, with the 2-year Treasury yield rising over 2 basis points to 3.637% intraday. The US dollar rose 1% against the Japanese yen, reaching 145.01. The US stock market remained relatively stable.

Some analysts pointed out that due to the weakening of US bonds, although the latest ADP data beating expectations might put some pressure on the US bond market, the impact should be mild and short-lived. The extent of the surprise is well within the margin of error, thus not really providing any new information.

According to a report released by the US Department of Labor on Tuesday, US job vacancies unexpectedly rose to a three-month high in August, surpassing economists' expectations. The data also indicates that despite the overall employment growth in the US slowing down, it remains fundamentally stable, consistent with the recent trend reflected in the latest small non-farm ADP data.

This Friday, just two days from now, the US Department of Labor will publish the highly anticipated non-farm employment report, with the market expecting the report to show an increase of 0.15 million in non-farm employment in September, while the unemployment rate is expected to stay at 4.2%. In August, non-farm employment only increased by 0.142 million, falling short of expectations, with a significant downward revision of the previous value for July, greatly disappointing the market. Although the ADP employment report is an advance indicator of official non-farm data, the two may sometimes differ significantly.

With the cooling of the US labor market, such as a clear upward trend in non-farm unemployment rates, the ISM manufacturing employment index remains weak, and other indicators of employment growth have cooled down. This has made labor market data even more important than inflation, becoming key economic data closely watched by policymakers and investors to assess whether more signals have been released to indicate whether the US economy can achieve a soft landing.

Concerned about the continued deterioration of the labor market in the usa, the Federal Reserve made a significant 50 basis point rate cut in September. Federal Reserve Chairman Powell stated on Monday that the labor market in the usa is strong, but has noticeably cooled over the past year. 'We believe it is not necessary to see further cooling of the labor market conditions to achieve the Federal Reserve's 2% inflation target.'

Editor / jayden