ADP Employment Report Indicates a Significant Increase in Jobs

Overview of the ADP Employment Report

In a surprising turn of events, the ADP Employment report has shown a larger than anticipated increase in jobs. The report indicated an increase of 143,000 jobs, compared to the expected 125,000 and the previous 103,000. This is the first major indication of labor market performance since the Federal Reserve cut rates by 50 basis points.

Job Creation and Wage Growth

The report showed a widespread rebound in job creation after a five-month slowdown. All sectors, except for information, saw an increase in jobs. Moreover, the manufacturing sector added jobs for the first time since April. However, wage growth continues to slow down. Year-over-year pay gains for job-stayers fell slightly in September to 4.7 percent. For job-changers, the decline was greater, falling from 7.3 percent in August to 6.6 percent.

Insights from ADP's Chief Economist

Nela Richardson, the Chief Economist at ADP, commented on the report. She noted that stronger hiring did not necessitate stronger pay growth last month. She added that workers who change jobs usually see faster pay growth. However, their premium over job-stayers shrank to 1.9 percent, matching a low last seen in January.

The Federal Reserve and the Job Market

The report raises questions about the Federal Reserve's next move. If jobs are re-accelerating, how will the Federal Reserve justify their next rate cut?

Bottom Line

The ADP Employment report has shown a surprising increase in jobs, indicating a rebound in the labor market. However, wage growth continues to slow down, and it remains to be seen how the Federal Reserve will respond to these changes. What do you think about this development? Feel free to share your thoughts and this article with your friends. Also, don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.