ADP Data Shows Sharp Reversal In Hiring Just Weeks Before Key Fed Meeting

• According to last week’s ADP NER report, U.S. companies added 2,500 jobs per week over four weeks ending November 1.
• The Department of Commerce on Tuesday also released the retail sales report for September, showing a modest increase during the month.
• The Producer Price Index for September rose 0.3% from a month earlier, according to the Bureau of Labor Statistics.

U.S. companies cut 13,500 jobs per week on average over four weeks ending November 8, adding to concerns of labor market weakness.

The data, released as part of a preliminary estimate in ADP’s National Employment Report, shows a reversal in hiring trends over the past week. According to last week’s ADP NER report, U.S. companies added 2,500 jobs per week over four weeks ending November 1.

The latest report comes weeks before the Federal Reserve is set to decide on its monetary policy direction and take a call on whether a rate cut in December is needed.

According to data from the CME FedWatch tool, there is an 82.7% probability of a 25-basis-point rate cut in December, up from 50.1% a week ago.

Retail Sales, PPI Below Estimates

The Department of Commerce on Tuesday also released the retail sales report for September, showing a modest increase during the month. The delayed report showed that retail purchases, not adjusted for inflation, rose 0.2% following a 0.6% increase in August. Excluding cars and gas, retail sales edged up by just 0.1%.

A Dow Jones estimate forecast a 0.3% increase for the month.

The Producer Price Index (PPI) for September rose 0.3% from a month earlier, according to the Bureau of Labor Statistics. The PPI report, also delayed, showed that the index rose 2.7% over the 12 months ended September, compared with a Dow Jones estimate of 2.8%, as cited by MarketWatch.

BLS Report Shows Stronger Hiring

The September jobs report released by the BLS last week showed that the U.S. economy added more jobs than expected.

According to the BLS report, nonfarm payrolls increased by 119,000 in September, notably higher than the 50,000 expected by analysts, MarketWatch reported, citing Dow Jones estimates.

However, the unemployment rate in September climbed to a four-year high of 4.4%, the highest since October 2021.

Meanwhile, U.S. equities gained in Tuesday morning’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.57%, the Invesco QQQ Trust ETF (QQQ) rose 0.06%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 1.05%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up by 0.26% at the time of writing.

Also See: Dan Ives Says Wall Street Is ‘Underestimating’ Scale And Scope Of AI Revolution: ‘Bears Have Never Understood This…’

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