Hiring bounced back across sectors
The ADP National Employment Report provides deeper insight into US payroll data. The report breaks down the number of jobs added in each sector. Another segment in the report segregates job data based on the size of the industry.
According to ADP’s October employment report, the trade, transport, and utility sector witnessed the most job losses this month. All of the other industries recorded a strong bounce from the slump in September. The following graph shows the number of jobs added in each sector in September and October.
Which sectors bounced back last month?
The business and professional services sectors (IYG) recorded another positive month of job increases. The sector has been improving every month, which indicates the increasing demand for these industries. The demand mainly increases when businesses are flourishing.
The other sector that recorded similar job growth is the construction (ITB) sector. The job growth has bounced back sharply. It indicates that the rebuilding efforts have started after the hurricanes. As a result, the economic data can reflect similar trends.
How will the ADP’s report impact markets?
ADP’s jobs report for October was at 235,000 jobs, which is above the consensus estimate of 200,000 jobs. Analysts’ estimate for the Bureau of Labor Statistics’ report on Friday stands at 312,000 new non-farm jobs—a steep rise from the 33,000 job losses in September. Although the September ADP report had a large divergence from the Bureau of Labor Statistics’ report, we could see a closer number this month.
Given that markets remain focused on the next Fed chair appointment and US tax reforms, volatility (VXX) could be low after the October jobs report. Bond (BND) yields could rise more after the Fed chair is confirmed this week. The US dollar’s (UUP) positive run is also expected to continue. The only risk to this outlook is a strong negative surprise from Friday’s non-farm jobs report.