According to ADP data, the number of employed persons in the private sector in the United States increased by 0.143 million in September, higher than the expected 0.12 million, with the smallest increase since March 2023 in August.

Despite some recovery, the three-month average of new job additions has dropped to 0.119 million, one of the lowest levels since 2020. Other data also indicates a slowdown in the labor market: recent unemployment rates have been steadily rising, and some employment growth indicators have cooled, prompting the Federal Reserve to cut interest rates in September by a larger margin than usual to prevent further weakness.

After the data was released, spot gold rebounded above 2650.

Federal Reserve Chairman Powell described the labor market as strong on Monday local time but also noted a significant cooling over the past year. He also added, 'We believe we don't need to see further cooling in the labor market' to achieve the 2% inflation target.

ADP's data precedes the non-farm payroll report to be released on Friday, which is expected to show moderate job growth in September, with the unemployment rate staying at 4.2%.

Another data released on Tuesday shows that although job vacancies unexpectedly increased in August, the employment rate remained at its lowest level since 2013, excluding the early stages of the pandemic. Another indicator from the Institute for Supply Management shows that the proportion of people reporting an increase in manufacturing employment is the smallest since May 2020.

This is the situation shown in the ADP report released on Wednesday, with wage growth slowing in September. For job switchers, income increased by 6.6% year-on-year, the slowest growth rate since April 2021. For those staying in their current positions, wage growth slightly slowed to 4.7%.

ADP's Chief Economist Nela Richardson said, "Stronger hiring does not necessarily require higher wage growth. In general, job switchers tend to see faster wage growth."

Recruitment has increased across various industries, with leisure and hospitality as well as construction leading the way. The information sector was the only industry to have layoffs last month. Job growth is also geographically widespread, with only companies with fewer than 20 employees reducing staff.

Although layoffs are still relatively low, some companies have recently announced layoff plans.

ADP's findings are based on payroll data covering over 25 million private sector employees in the USA.

Following the data release, traders expect the Fed to cut rates by approximately 33 basis points in November, which means the chance of officials choosing a second 50 basis points rate cut is slightly lower - but still quite high. They expect a total reduction of around 69 basis points by the end of this year, compared to around 70 basis points prior to the data release.

ADP's figures provide traders with an early indicator for the September employment report scheduled for release on Friday. Following the Fed's 50 basis points rate cut last month, Powell stated that the Fed is confident in maintaining a strong labor market "amid moderate growth and sustainable inflation trending down to 2%."

However, Powell also cautioned against assuming that the 50 basis points rate cut sets the pace that policymakers will continue to follow - emphasizing that everything will depend on how the data performs.

Editor/Rocky