The ADP national employment report shows private payrolls up by 113,000 in October after an unrevised increase of 89,000 in September. The October gain is below the consensus of up 145,000 in the Econoday survey of forecasters. October payrolls for goods-producers are up 6,000 and service-providers are up 107,000.

Among goods-producers, natural resources/mining is down 1,000, while construction is up 4,000 and manufacturing up 3,000. Service-providers' payrolls were up 45,000 in education/healthcare, up 35,000 in trade/transportation/utilities, up 21,000 in financial activities, and up 17,000 in leisure/hospitality. Payrolls are unchanged for the information sector and down 1,000 for other services.

Payroll change by establishment size was largest for medium sized businesses (50-499 employees) at up 78,000, with smaller gains of 18,000 for large businesses (500+ employees) and 19,000 for small firms (1-49 employees).

Overall, hiring appears to be cooling, but not falling drastically. Churn in the labor market is less, and along with it the pace of increases in wages. The median change in annual pay is up 5.7 percent in October for those who stayed at their current job, the lowest since 5.6 percent in September 2021. For those who changed jobs, the median annual increase is up 8.4 percent, down for the 11th month in a row and the lowest since 8.1 percent in June 2021. Businesses are still having to compete for qualified workers, but with less upward pressure on wages and more labor supply to choose from.

Forecasters see ADP's October employment number at 145,000. This would compare with September growth in private payrolls reported by the Bureau of Labor Statistics of 263,000 which was sharply higher than 177,000 in August. ADP's number for September was 89,000, sharply lower than its August number of 180,000.

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.