| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Private Payrolls - M/M | 115,000 | 75,000 to 129,000 | 233,000 | 143,000 | 159,000 |
Highlights
The ADP national employment report surprised to the upside with a gain of 233,000 in October after an upward revision to 159,000 in September. The consensus for October is an increase of 115,000 in private sector jobs in the Econoday survey of forecasters. The report said,"Job creation hit its highest level since July 2023 as the economy worked through hurricane recovery. Manufacturing was the only sector to shed jobs."
Jobs at goods-producers are up 22,000 in October with construction up 37,000 and mining up 4,000 while manufacturing is down 19,000. The strength in construction is likely in part from workers needed to clear debris and repair or rebuild infrastructure destroyed by severe weather. However, it also shows that homebuilding is anticipating lower interest rates and new demand for housing, and that home renovation and repair remains active.
Service-providers added 211,000 to their payrolls. All industries had increases the largest of which are 53,000 in education/health services, 51,000 in trade/transportation/utilities, and 37,0000 in leisure/hospitality. Some of the hiring may reflect emergency services and/or temporary workers to address the devastation in the Southeast from Hurricane Helene.
If Fed policymakers determine that underlying conditions in the labor market are strong, and that inflation remains elevated and progress in disinflation is too slow, it raises the possibility that future rate cuts could be fewer and/or slower to come than previously thought. A rate cut at the November 6-7 FOMC meeting remains likely, but the one anticipated for December becomes more problematic.
Jobs at goods-producers are up 22,000 in October with construction up 37,000 and mining up 4,000 while manufacturing is down 19,000. The strength in construction is likely in part from workers needed to clear debris and repair or rebuild infrastructure destroyed by severe weather. However, it also shows that homebuilding is anticipating lower interest rates and new demand for housing, and that home renovation and repair remains active.
Service-providers added 211,000 to their payrolls. All industries had increases the largest of which are 53,000 in education/health services, 51,000 in trade/transportation/utilities, and 37,0000 in leisure/hospitality. Some of the hiring may reflect emergency services and/or temporary workers to address the devastation in the Southeast from Hurricane Helene.
If Fed policymakers determine that underlying conditions in the labor market are strong, and that inflation remains elevated and progress in disinflation is too slow, it raises the possibility that future rate cuts could be fewer and/or slower to come than previously thought. A rate cut at the November 6-7 FOMC meeting remains likely, but the one anticipated for December becomes more problematic.
Market Consensus Before Announcement
Job growth is expected to show slowing with private payrolls up 115,000 in October.
Definition
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.
Description
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.
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.
