ADP Data Shows US Added 103k Jobs in November, Lower than Expected
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ADP Data Shows US Added 103k Jobs in November, Lower than Expected

The latest ADP report showed that US private sector's job creation slowed down considerably in November.
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Payroll processor ADP reported that the US private sector added 103,000 jobs in November, missing the consensus estimates of 128,000 and below the 106,000 reported a month earlier. US equities climbed at the market open on Wednesday, while Treasury bond yields experienced a pullback. 

Private Sector Sees Slowest Wage Growth Since Sep. 2021 

According to a new report by payroll processing firm ADP, the US private sector added less-than-anticipated jobs in November, and wages saw the weakest growth in over two years.

Notably, private companies hired 103,000 new employees last month, notably missing the downwardly revised 106,000 in October and well below the Dow Jones estimate of 128,000. Annual pay increased by 5.6% in November, marking the smallest monthly gain since September 2021. 

Furthermore, workers who changed their jobs saw wage bumps of 8.3%, representing the smallest premium for switching positions since ADP began issuing these reports in 2020. 

The goods and services sectors saw soft job growth last month, while the manufacturing, leisure, and hospitality industries declined. To be more specific, leisure and hospitality posted a loss of 7,000 jobs, while service-related industries accounted for all the job gains for November. 

Goods producers, on the other hand, recorded a net loss of 14,000.

“Restaurants and hotels were the biggest job creators during the post-pandemic recovery. But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024.”

– said Nela Richardson, Chief Economist at ADP.

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Stocks Advance, Bond Yields Retreat on Soft ADP Report

The Federal Reserve officials will be keeping tabs on the slowdown in the private sector’s job creation, which comes just days before the official non-farm payrolls report due on Friday. 

Moderating the strong labor demand has been among the key objectives behind the US central bank’s historic move to raise interest rates to levels not seen in over two decades. In other words, officials hope that a cooling labor market could reduce some upward pressure on sticky inflation

But it is safe to say that current interest rates are making an impact. The Labor Department reported on Tuesday that job openings dipped to their lowest mark in over two years in October, pointing to a trend that could make it easier for the Fed to potentially begin its long-awaited dovish pivot.

In the wake of the ADP report, major US market indices edged higher on Wednesday’s market opening, with the S&P 500 and DJIA advancing 0.17% and 0.20%, respectively. Simultaneously, yields on long-term Treasuries slipped, with 10-year and 20-year ones retreating to 4.136% and 4.424%, respectively. 

How do you think the upcoming non-farm payrolls report will impact the markets on Friday? Let us know in the comments below.