The ADP national employment report put the number of private sector jobs at up 177,000 which is below the consensus of 200,000 in the Econoday survey of forecasters (see note below on July's revision).

Among goods-producers, all three sectors have payroll increases in August. Payrolls are up 5,000 for natural resources/mining, 6,000 for construction, and 12,000 for manufacturing.

Among service-providers, all sectors except one added to payrolls. Financial activities added no jobs in August. The largest job increases by service sector are 52,000 in education/health, 45,000 in trade/transportation/utilities, and 30,000 in leisure/hospitality.

The breakdown by establishment size shows all three hired in August. Small businesses (1-49 workers) added 18,000 to payrolls, medium (50-499) added 79,000, and large (500+) added 83,000.

The year-over-year median increase in pay continues to slow. In August, job-stayers' pay rose 5.9 percent year-over-year, the first reading below 6 percent since October 2021. For job-changers, the increase is 9.5 percent year-over-year, the first time below double-digit rises since August 2021. Pay increases continue to be above the current pace of inflation, but are cooling.

Special note: July has been revised higher to 371,000 and includes a re-benchmarking with the Quarterly Census of Employment and Wages (QCEW). ADP said its full-year benchmarking will take place in February with the publication of the January 2024 report. ADP's historical data remains tied to the old benchmarking, showing a July revision to 312,000 from 324,000.

Forecaster see ADP's August employment number at 200,000. This would compare with July growth in private payrolls reported by the Bureau of Labor Statistics of 172,000. ADP's number for July was high for a second month in a row at 324,000.

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.