The ADP national employment report shows a 497,000 rise in private payrolls in June after a downward revision to 267,000 in May. The increase blows past the consensus of 235,000 in the Econoday survey of forecasters. Jobs are 124,000 higher for goods-producers in June, mainly due to increases of 69,000 in mining and natural resources, and 97,000 in construction. Manufacturing payrolls are down 42,000 in June. Service-providers' payrolls are up 373,000 in June. There was a mixed performance across sectors, but 232,000 in leisure and hospitality far outpaces any losses.

Small companies (1-49 workers) add 299,000 jobs in June and mid-sized companies (50-499 workers) add 183,000 jobs. Large companies (500+) reduce payrolls by 8,000. The slowdown in the economy along with a tighter labor market and slower wage gains is benefiting smaller firms that have had trouble attracting and retaining workers.

Forecasters see ADP's June employment number at 235,000. This would compare with May growth in private payrolls reported by the Bureau of Labor Statistics of 283,000. ADP's number for May was very close at 278,000.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.