{"id":68697,"date":"2023-10-04T13:17:46","date_gmt":"2023-10-04T17:17:46","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/private-payrolls-come-in-far-below-expectations\/"},"modified":"2023-10-04T13:17:49","modified_gmt":"2023-10-04T17:17:49","slug":"private-payrolls-come-in-far-below-expectations","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68697","title":{"rendered":"Private Payrolls Come In Far Below Expectations"},"content":{"rendered":"<div>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Key takeaways<\/h2>\n<ul>\n<li>The ADP jobs report only added 89,000 jobs to the private sector, falling far under the estimates<\/li>\n<li>Bond yields retreated from 16-year highs at the news, and the major stock indexes all added gains<\/li>\n<li>More unemployment and jobs data on Friday will help determine whether the Fed needs to cut interest rates or not<\/li>\n<\/ul>\n<p>According to new data from the Labor Department, private payroll growth declined significantly in September, giving stocks some breathing room and sending bond yields retreating from multi-year highs. It\u2019s the news the markets and the Fed needed, who will be considering whether the economy is still running too hot to keep inflation in check.<\/p>\n<p>With bonds marching upwards and the stock markets suffering for the last two months, it\u2019s still uncertain which way things are headed &#8211; but the economic outlook looked significantly less positive just 24 hours ago. This latest jobs report is the shot in the arm the markets needed &#8211; and may even convince the Fed that it\u2019s time to start dropping interest rates.<\/p>\n<p>Here\u2019s the lowdown on the latest employment data, what we can expect later this week which might upset the apple cart and why the markets are so crazy right now.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">What\u2019s the latest with private payrolls?<\/h2>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>The ADP jobs report for September confirmed private sector payroll growth fell sharply during the month, with 89,000 jobs added. That\u2019s a big step down from the 180,000 upwardly revised figure for August and way under the 160,000 estimate from Dow Jones economists. It\u2019s the slowest payroll growth pace since January 2021.<\/p>\n<p>Annual wage growth also stood still, reporting a 5.9% rate in September, the same as August and marking a full year of no acceleration in wage growth. \u201cWe are seeing a steepening decline in jobs this month,\u201d said Nela Richardson, chief economist at ADP. \u201cAdditionally, we are seeing a steady decline in wages in the past 12 months.\u201d<\/p>\n<p>Services accounted for almost all of the monthly payrolls, with leisure and hospitality leading the charge with 92,000 jobs. Financial services and construction also added to the total, but other sectors lost employees: 32,000 in professional and business services, 13,000 in trade, transportation and utilities, and 12,000 in manufacturing.<\/p>\n<p>As for where in the U.S. it\u2019s happening, the West and Pacific areas saw the strongest growth in jobs added. The South was the only region to see an overall drop in jobs added.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Is there any other data to go on?<\/h2>\n<p>Tuesday saw the monthly Job Openings and Labor Turnover Survey (JOLTS) from the Labor Department add far more open job vacancies than expected, sending ripples throughout the markets. Job openings reached 9.61 million for August, which is up by nearly 700,000 from July and arrived well above the consensus estimate of 8.8 million.<\/p>\n<p>On the other hand, actual hires were a different story. They moved up to 5.857 million, only a 35,000 climb from the previous month. The majority of the new job openings came from professional and business services, which surged by 509,000.<\/p>\n<p>The government\u2019s unemployment figures will be released at the end of the week. For August, the unemployment rate hit 3.8%, which was way up from July and marked the highest level since February 2022.<\/p>\n<p>We\u2019re also expecting the non-farm payroll data from the government on Friday. Analysts are predicting a 170,000 payroll rise in September, which would be down from the 187,000 figure in August.<\/p>\n<p>All of this together will better understand the U.S. economy\u2019s health for investors and the Fed. It\u2019s a toss-up right now: yesterday\u2019s surprise surge in the JOLTS data sparked a sell-off in stocks, but today\u2019s much cooler payroll data has sent stock futures rising.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">The U.S. economy is in turmoil<\/h2>\n<p>The relationship between bonds and stocks has always been adverse, and that couldn\u2019t be truer right now. The bonds market has been flying upwards, with the 30-year Treasury bond creeping up over 5% and the 10-year Treasury note rising to as much as 4.884%. Neither of those percentages has been that high since 2007.<\/p>\n<p>As you can imagine, the stock market hasn\u2019t handled things so well. The Dow Jones Industrial Average index has now fallen so swiftly that it\u2019s given up its gains for the year and is currently 0.4% down since 2023 began.<\/p>\n<p>The S&amp;P 500 fell to a four-month low on Tuesday, while the Nasdaq dropped 1.8%. Tellingly, the CBOE Volatility Index rose above 20 during intraday trading, which is a key sign of jitters in the markets and is the highest reading since May.<\/p>\n<p>It doesn\u2019t help that for the first time ever, Congress voted in favor of removing its House Speaker. Kevin McCarthy was ousted by the far-right wing of Republicans, who were furious he put through the eleventh-hour bill that stopped the government from shutting down. (You can\u2019t make it up.) The uncertainty is creating further havoc in the markets this week.<\/p>\n<p>But did today\u2019s fresh data do anything to help stocks and bonds return to less frenetic levels?<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">What was the market reaction?<\/h2>\n<p>The latest jobs report has gone some way in relieving the pressure from the markets. After the private payrolls report, the 10-year Treasury note dropped over five basis points to 4.745%, while the 30-year Treasury bond pared back down to 4.87%.<\/p>\n<p>As for stocks, they were climbing at the news. The Dow Jones Industrial Average rose 57 points, or 0.2%, while the S&amp;P 500 made a 0.3% gain. The Nasdaq Composite climbed 0.6% higher.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Could the Fed raise interest rates again?<\/h2>\n<p>The crux of the issue with the markets is that nobody wants interest rates to stay at their highest levels in 22 years or, worse, increase even further. But that\u2019s exactly the decision the Fed now has to face at its next meeting in November.<\/p>\n<p>More attention than normal will be placed on Friday\u2019s unemployment and non-farm payroll figures to try and determine which direction monetary policy is heading in. If Friday shows a better-than-expected figure, it could pressure the Fed to cut rates so the bond market returns to more normal levels.<\/p>\n<p>The CME FedWatch tool currently had a pause priced in at 77% certainty compared to a 22% chance that the Fed will raise interest rates again. December is less confident, with a current 64% projection that interest rates will stay the same, with the other third favoring a quarter-point or half-point increase.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">The bottom line<\/h2>\n<p>There\u2019s a lot of uncertainty in the air right now, which is coming to a head after a couple of months of stock declines. As bond yields have steadily increased, fears over whether interest rates need to stay higher for longer are putting the U.S. economy towards a tipping point.<\/p>\n<p>The Fed has made it clear that it will continue to follow the data when deciding monetary policy. That doesn\u2019t necessarily mean Wall Street will get its way, though the Fed will want to avoid a recession. It\u2019s time to get out your crystal ball for what happens next.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/qai\/2023\/10\/04\/september-jobs-report-private-payrolls-come-in-far-below-expectations\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key takeaways The ADP jobs report only added 89,000 jobs to the private sector, falling far under the estimates Bond yields retreated from 16-year highs at the news, and the major stock indexes all added gains More unemployment and jobs data on Friday will help determine whether the Fed needs to cut interest rates or [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":68698,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-68697","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Private Payrolls Come In Far Below Expectations | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Key takeaways The ADP jobs report only added 89,000 jobs to the private sector, falling far under the estimates Bond yields retreated from 16-year highs\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=68697\" \/>\n<meta property=\"og:locale\" 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