Today's Report (12/01/2021)

Private sector employment increased by 534,000 jobs from October to November according to the November ADP National Employment Report.

The labor market recovery continued to power through its challenges last month,” said Nela Richardson, chief economist, ADP. “November’s job gains bring the three-month average to 543,000 monthly jobs added, a modest uptick from the job pace earlier this year. Job gains have eclipsed 15 million since the recovery began, though 5 million jobs short of pre-pandemic levels. Service providers, which are more vulnerable to the pandemic, have dominated job gains this year. It’s too early to tell if the Omicron variant could potentially slow the jobs recovery in coming months.”

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.