The ADP employment report for November revealed a notable slowdown in job additions within the U.S. private sector, recording an increase of 146,000 jobs. This figure fell short of the anticipated 150,000 and was the smallest rise since August 2024. The previous month's growth was also revised down to 184,000 from the initial 233,000.
Upon release, the data had an immediate economic impact. Spot gold saw a short-term increase of $10, while U.S. Treasury yields narrowed their losses and U.S. stock index futures added to their gains.
Industry analysis showed a mixed performance across sectors. ADP's Chief Economist, Nela Richardson, noted that although the overall growth is healthy, manufacturing experienced its weakest performance since the spring. Additionally, the financial services and leisure and hospitality sectors performed poorly.
The slowing job growth may bolster expectations for a Federal Reserve rate cut in December, potentially fueling bearish sentiments towards the U.S. dollar. However, it's crucial to acknowledge that ADP figures can be volatile and might undergo future revisions.
Evidenced by subdued market reactions, as Adam Button, a forex analyst, pointed out, the ADP report has a history of limited predictive power for the more comprehensive nonfarm payroll figures. Investors might be more focused on upcoming reports and remarks from Federal Reserve Chair Jerome Powell scheduled shortly before the next Federal Reserve meeting.
With external factors such as southeastern storms and Boeing strikes potentially affecting future labor statistics, institutions like the Bank of America caution against drawing firm conclusions from preliminary data. Market participants now turn their attention to the much-anticipated nonfarm payrolls report later in the week. This anticipated report could provide further clarity on the labor market's health and influence Federal Reserve policy decisions.