USD Resumes Climb as ADP Confirms Stable US Jobs Sector

The ADP data showed higher jobs in September, reversing the slowing trend and further confirming that US employment is in decent shape. This comes after yesterday’s upbeat JOLTS Job Openings, which lowered the odds of another 50 bps FED rate cut, as Jerome Powell’s comments suggested yesterday, benefiting the US dollar.

Job growth for September came in at 143K, exceeding the forecast of 120K. Following the release of this data, the USD gained momentum, reaching its daily highs. EUR/USD is edging closer to 1.10, while USD/JPY has surpassed 146, rising by about 2.5 cents. Bond markets are also seeing declines, with yields rising as attention shifts from the Middle East to the US economy.

ADP September 2024 Employment Report

• ADP September employment: +143K (vs +120K expected)
  • Previous was +99K (revised up to +103K)
• Annual pay growth:
  • Job-stayers: 4.7% (vs 4.8% prior)
  • Job-changers: 6.6% (vs 7.3% prior)
• Sector Performance:
  • Services: +101K (vs +72K prior)
  • Goods-producing: +42K (vs +27K prior)
  • Strength observed in construction, education, and leisure/hospitality sectors.
• Breakdown by Industry:
  • Natural resources/mining: +14,000
  • Construction: +26,000
  • Manufacturing: +2,000
  • Trade/transportation/utilities: +14,000
  • Information: -10,000 (only sector to decline)
  • Financial activities: +2,000
  • Professional/business services: +20,000
  • Education/health services: +24,000
  • Leisure/hospitality: +34,000
  • Other services: +17,000
• Key Trends:
  • The job market saw stronger-than-expected growth, with notable contributions from construction and leisure/hospitality.
  • Annual pay growth continues to slow for both job-stayers and job-changers, reflecting some cooling in wage pressures.
  • The information sector experienced a notable decline, losing 10,000 jobs, in contrast to growth across other sectors.

The market now assesses a 65% likelihood of a 25 basis point rate cut by the Fed in November, up from an even split just a week ago. The stronger ADP data is providing support for the USD ahead of Friday’s non-farm payrolls (NFP) report, although ADP results have not always been a reliable predictor of NFP outcomes. In the bigger picture, market sentiment is shifting away from recession fears, with growing optimism around global growth, driven by the Fed’s easing policies and recent monetary and fiscal initiatives from China.

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