Today's Report (01/05/2022)

Private sector employment increased by 807,000 jobs from November to December according to the December ADP National Employment Report.

“December’s job market strengthened as the fallout from the Delta variant faded and Omicron’s impact had yet to be seen,” said Nela Richardson, chief economist, ADP. “Job gains were broad-based, as goods producers added the strongest reading of the year, while service providers dominated growth. December’s job growth brought the fourth quarter average to 625,000, surpassing the 514,000 average for the year. While job gains eclipsed 6 million in 2021, private-sector payrolls are still nearly 4 million jobs short of pre-COVID-19 levels.”

What Is It?

It is the estimated change in the number of employed people in the USA, during the previous month, excluding the farming industry and government.

What Are The Fundamental Effects?

It can offer a truer sense of labor market conditions. Private-sector employers are likely to hire when they have confidence in the economy's health. However, if they do not have faith in the economy's health, then companies will potentially hire less and may make cuts to satisfy the loss of profit.

How Does It Affect The Markets?

CURRENCY - If the payroll figure increases by an average of 150,000 or more, it can lead to firming of interest rates. Job growth of less than 100,000 suggests a softening or weakening economy.

STOCKS - Typically an expectation of lively job growth is viewed as bullish for stock prices. Persistent vigorous growth will strain the economy and rouse inflation pressures. If the ADP report consistently and correctly estimates fewer jobs, it could slash projections of corporate earnings.

BONDS - An unexpected surge in employment could put bonds in a vulnerable position. Bond traders are interested in how much the actual figure veers from the forecast figure. If there is a consistent downward trend, the Fed may lower interest rates, which in turn can lead to higher bond prices and lower yields.