US Macro Updates

Key takeaway: Private sector employment increased by 113K jobs in October. Consensus expectations were for an increase of 150K. This was clearly a downside surprise to the market. However, the market often tends to pay more attention to the BLS non-farm payroll report (that comes out this Friday). Secondly, the ADP employment data had surprised to the downside even last month. However, NFP data for September came at a whopping 336K jobs. Nonetheless, the combination of a lower ADP print and other key events / indicators of the same day (the Fed meeting as well as the Treasury refunding announcement), mostly had the effect of dragging long bond yields lower. Lastly, job openings indicated by the JOLTS data were still up – which still indicates a tight labour market. The report also suggested that annual pay, similar to last month’s data, was up 5.7% y-o-y – a figure too high from an inflation persepctive.   

• ADP Non Farm Employment added 113K Jobs in Sep (estimate 150K)

4th Oct 2023

Key takeaway: Private sector employment increased by 89K jobs in September. Consensus expectations were for an increase of 153K. This was clearly a downside surprise to the market. While one data point does not provide sufficient evidence of a slowdown in the job market (especially given that JOLTS data a couple of days back surprised to the upside), it came on the back of a monster rally in treasury yields over the past few weeks. That was sufficient ammunition for markets to tone down their expectations and take long term treasury yields a bit lower from the recent highs. It is also key to remember that the ADP report and the official government jobs data (NFP – coming this Friday) employ different methodologies and the underlying job creation numbers reported by both sources can vary significantly. However, the key point underlying data from both sources remains that the job market, even though easing now, remains tight overall and keeps the Fed on its toes for fear of a wage price spiral. The report also suggested that annual pay, similar to last month’s data, was up 5.9% y-o-y – a figure too high from an inflation persepctive.   

• ADP Non Farm Employment added 89K Jobs in Aug (estimate 153K)

30th Aug 2023

Key takeaway: Private sector employment increased by 177K jobs in August. Consensus expectations were for an increase of 195K. The modest August print of 177K jobs in the ADP report comes on the back of previous month’s massive 324K print. The ADP report and the official government jobs data (NFP) employ different methodologies and the underlying job creation numbers reported by both sources can vary significantly. However, the key point underlying data from both sources remains that the job market, even though easing now, remains tight overall and keeps the Fed on its toes for fear of a wage price spiral. The report also suggested that annual pay was up 5.9% y-o-y – a figure too high from an inflation persepctive.   

• ADP Non Farm Employment added 177K Jobs in Aug (estimate 195K)

2nd Aug 2023

Key takeaway: Private sector employment increased by a massive 324K jobs in July. Consensus expectations were for an increase of 189K. This continues the unprecedented trend of upside surprises on jobs data. Consider this – the ADP jobs data has surprised markets on the upside for 8 out of the past 12 months! Most of the jobs were added in the Leisure and Hospitality sector (+201K jobs). US Treasury yields were higher across the board in response today. However, that might also have been attributable to Fitch’s downgrade of US credit rating to AA+ today. Median change in annual pay was an elevated 6.2% for job-stayers and 10.2% for job-changers. The June total of jobs added was revised from 497,000 to 455,000.  

• ADP Non Farm Employment added 324K Jobs in Jul (estimate 189K)