Hiring affected in most sectors
The ADP National Employment Report gives us insight into the employment trends within different sectors and produces another report that groups this data based on the size of the company. As per the September ADP Employment Report, there was a major drop in the number of jobs created in the trade, transport, and utility sector. This industry was impacted by the hurricanes in September, as transport and trade services saw a negative impact from weather conditions. The chart below depicts the number of jobs added in each sector in August and September.
Business and professional services and construction sectors continue to improve
The business and professional services sectors (IYG) continued to grow in September. These sectors have been improving every month, indicating the increasing demand in these industries. The other sector that’s displaying similar job growth is the construction (ITB) sector where the job growth has been steady and is expected to increase further in the coming months as rebuilding efforts in the hurricane-damaged regions picks up speed.
What impact will ADP report have on markets
The ADP Jobs Report for September, which reported the addition of 135,000 jobs, was a positive surprise that beat market expectations of 125,000 jobs. Will the non-farm payrolls data on Friday have a similar surprise?
If we consider the data from the last 12 months, the ADP jobs data and the BLS data had an average difference of 35,000 jobs. The market consensus is for 95,000 jobs being added in the September non-farm report. Going by the ADP report, there’s a strong possibility of a positive surprise. If that happens, there could be a spurt in volatility (VXX) on Friday, as the odds for a Fed hike would strengthen further. US bond (BND) yields could move higher, and the US dollar (UUP) could resume its rally.