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Technological Disruptions: The Only Jobs Killers for Now

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Hiring remains hot across most sectors

ADP’s jobs report for November was published on December 6. It provided deeper insight into improvements in US employment. ADP prepares the report in collaboration with Moody’s Analytics. The report breaks down the number of jobs added based on the size of the companies and the sector where the companies operate.

Mark Zandi, the chief economist of Moody’s Analytics, said that the US job market is still solid. In recent months, the jobs scenario was only soft in sectors that are being disrupted by technology. He quoted the example of large retailers (XRT) where jobs were being impacted because of the growth in e-commerce and automation.

Improved hiring last month

Job growth was the highest in education and health services, followed by business services (IYG) and manufacturing (XLI). The highlight of this month’s report was increased employment in manufacturing sectors. It’s a positive sign for the sector, which has seen a continual decline in employment over the years. President Trump’s target to bring back manufacturing jobs might take longer to achieve. Even this minor improvement is a step in the right direction.

The construction sector (ITB) saw a decline in the number of jobs added in November. It might have been due to the decline in demand for workers after two months of strong demand to aid rebuilding efforts after the hurricanes in the affected regions.

Key takeaway from ADP’s report

ADP’s jobs report for November at 190,000 jobs is marginally above the consensus estimate of 185,000 jobs. The expectation for the Bureau of Labor Statistics’ non-farm report stands at 200,000 new non-farm jobs, which is closer to ADP’s estimate. Markets are prepared for an interest rate hike from the Fed at its next policy meeting on December 12–13. This week’s jobs data will likely cement that decision.

We can’t expect the usual level of volatility (VXX) with this week’s jobs report because it probably won’t change the Fed’s decision. A strong positive surprise could generate some gains in the US dollar (UUP) and the bond markets before this week’s close.

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