If hemorrhaging bond bulls were praying for a downside miss from any of this week’s key labor market data out of the US, they were granted a reprieve on Wednesday.
Private sector US employers added just 89,000 jobs in September, ADP said.
That was the fewest since the last negative print (in January of 2021). Consensus wasn’t close. Economists collectively expected 150,000 from the headline. The range of estimates was 102,000 to 228,000.
Note that private hiring was running above 450,000 in June. Now we’re below 100,000, apparently.
ADP chief economist Nela Richardson was blunt. “We are seeing a steepening decline in jobs this month,” she remarked.
Job gains were entirely concentrated in firms with 499 or fewer employees. Large firms shed 83,000 positions.
Manufacturing employment contracted by 12,000, ADP said. A 32,000 drop in professional and business services hiring last month made for an odd juxtaposition with the government’s JOLTS report, which showed job openings in the sector rose by half a million in August. Leisure and hospitality hiring was robust, near 100,000.
On the wage side, annual pay growth for job “stayers” fell below 6% for the first time in two years.
For job switchers (“changers” in the ADP report), the reward for quitting is diminishing rapidly. Annual pay growth for that cohort was 9% last month. That was the least since June of 2021. The spread between the two series was the narrowest in 35 months.
It’s fair to say the ADP figures helped offset the hawkish JOLTS report, even as the latter is the real linchpin for the “immaculate disinflation” narrative. Obviously, NFP on Friday will have the final say.
Coming quickly full circle, the very cool private sector hiring figures should be a reprieve for bloodied bond bulls, but the momentum behind the long-end Treasury selloff may be tough to overcome.
I’m inclined to believe ADP/NFP more than JOLTS at this point.
Think about all the company calls you’ve listened to lately.  Who is still calling out a large and urgent hiring need?