ADP Employment Report Shows Possible Jobs Rebound
Private sector employment ticked back up, with the ADP Employment report showing an additional 568,000 jobs added from August to September.
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Large-sized businesses grew the most, contributing 390,000 jobs to the total, with mid-sized and small companies adding 115,000 and 63,000 respectively.
The service sector, the hardest-hit industry during the pandemic, is continuing to rebound as it accounted for 466,000 of the 568,000 new jobs added.
September’s numbers are a welcome surprise after disappointing lumps in July and August, which both brought in a little more than half of the numbers for September’s employment.
The private payroll ADP employment report comes ahead of the Bureau of Labor Statistics’ official report on Friday. Different methodologies are used, which leads to a poor correlation between the two reports, Reuters reports. Nevertheless, the ADP report acts as a sort of preliminary test for markets ahead of the larger report released on Friday, which the Fed uses as a serious indicator for future interest rate moves.
Federal Reserve Chair Jerome Powell said last month that the economy was one “decent” monthly employment report short of meeting what they considered the threshold for tapering its massive bond-buying program, Reuters reports. This means that if Friday’s report mirrors ADP’s preliminary numbers, we could potentially see movement from the Fed to start tapering back bond purchases. The Fed has kept its current bond-buying program massive, in order to accommodate an easy money policy of low interest rates and easy borrowing post-pandemic.
While it is possible, the jobs market would be rebounding off of a seven-month low in August, which only created 235,000 jobs. It remains to be seen if a slight rebound in September will be sufficient to consider enough of an economic liftoff.
The 10-year U.S. Treasury yield remained flat around 1.5% this morning after the release of the ADP report The yield on the benchmark 10-year Treasury note fell 1 basis points to 1.52% at around 9:45 a.m. ET and the 30-year Treasury bond dropped 2 basis points to 2.07%.
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