Today's Report (09/06/2021)

Private sector employment increased by 568,000 jobs from August to September according to the September ADP National Employment Report.

“The labor market recovery continues to make progress despite a marked slowdown from the 748,000 job pace in the second quarter,” said Nela Richardson, chief economist, ADP. “Leisure and hospitality remains one of the biggest beneficiaries to the recovery, yet hiring is still heavily impacted by the trajectory of the pandemic, especially for small firms. Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the 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 labour 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.