The ADP jobs report added to a string of soft labor market indicators that have pushed markets closer to pricing in three Federal Reserve rate cuts this year. However, the S&P 500 traded flat, while the Dow Jones Industrial Average edged lower as Salesforce weighs following its less-than-stellar outlook.
Initial jobless claims, also out Thursday, exceeded forecasts, though continuing claims pulled back. Earlier Thursday, Challenger, Gray & Christmas reported that layoff announcements jumped 39% from July to 85,979 early Thursday. On Wednesday, the Bureau of Labor Statistics (BLS) reported a bigger-than-expected drop in job openings in July.
10:05 a.m. ET
ISM Services Index Shows Pickup
The Institute for Supply Management reported that its services index rose 1.9 points to 52, moving moderately above the neutral 50 level. While the business activity gauge rose to 55 from 52.6, and the new orders index jumped 5.7 points to 56, the employment index remained in contraction territory, inching up to 46.5.
9:43 a.m. ET
Fed Rate-Cut Odds Unmoved
Markets have reacted little to the morning's economic data, despite softer hiring and rising jobless claims.
Markets see 97% odds of a Sept 17 Fed rate cut and 44% odds of 75 basis points in cuts at the year's final three meetings, according to CME Group's FedWatch tool. Both are essentially unchanged from before the data.
The S&P 500 remains up 0.2%.
8:46 a.m. ET
Friday's Jobs Report Forecast
Economists were already expecting pretty modest payroll gains in tomorrow morning's official August jobs report. Overall, payrolls are expected to rise 77,000, including a 75,000 increase among private firms, according to the Econoday consensus estimate.
The unemployment rate is expected to tick up to 4.3% as 12-month average hourly earnings growth slips to 3.8% from 3.9%.
8:34 a.m. ET
Initial Jobless Claims Rise
Initial claims for unemployment benefits rose to 237,000 in the week through Aug. 30, up 8,000 from an unrevised 229,000 the prior week. Continuing claims by job-losers who have yet to find new work fell 4,000 to 1.64 million in the week through Aug. 23, after the prior week's figure was revised down by 10,000.
The steadying of continuing claims is consistent with a steady unemployment rate.
8:27 a.m. ET
Labor Market 'Whipsawed By Uncertainty'
ADP Chief Economist Nela Richardson said the labor market has been "whipsawed by uncertainty." She added that potential explanations for the hiring slowdown include "labor shortages, skittish consumers, and AI disruptions."
8:25 a.m. ET
ADP Data By Sector
ADP said leisure and hospitality jobs rose by 50,000 and construction by 16,000, but other areas were soft. Manufacturers shed 7,000 jobs. Education and health services employment fell by 12,000. The trade, transportation and utilities sectors cut 17,000 jobs.
8:16 a.m. ET
ADP Jobs Report Data
Private-sector employers added just 54,000 jobs last month, according to payroll processor ADP's monthly estimate. Economists were expecting a modest 68,000 gain. July hiring gains were revised up to 106,000 from 104,000.
ADP Forecasts
Economists expect payroll processor ADP's estimate of private-sector employment in August to show a gain of 68,000, according to the Econoday consensus.
Markets sometimes react to ADP data right away, but the impact often wears off quickly. That may be because ADP doesn't have a great track record of predicting how the official monthly BLS employment report will come out.
ADP initially reported a gain of 104,000 private jobs in July, while BLS showed a gain of 83,000.
Initial Jobless Claims Expectations
Economists expect 232,000 initial claims for unemployment benefits in the week through Aug. 30, up from 229,000 the prior week. Continuing claims are a key data point to watch because they reflect the ability of job losers to find new work. Continuing claims have been trending higher, consistent with higher unemployment.
Federal Reserve Rate-Cut Odds
Markets are pricing in 98% odds of a quarter-point rate cut at the Sept. 17 Fed meeting. Those odds have climbed from 87% a week ago, boosted by the soft Job Openings and Labor Turnover Survey report on Wednesday.
For the first time since April 2021, the number of unemployed persons now tops the number of job openings.
Markets are pricing in 91% odds of at least 50 basis points in rate cuts over the year's final three Fed meetings. Ahead of Thursday's data, markets saw 43.5% odds of a third quarter-point cut this year.
S&P 500
S&P 500 futures edged up 0.1% in early Thursday stock market action ahead of the ADP jobs data. On Wednesday, the S&P 500 climbed 0.5% as the 10-year Treasury yield fell 7 basis points amid the soft JOLTS report.
The S&P 500 finished up 9.6% for the year and 0.8% off its record closing high on Aug. 28.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
