Private-sector employment rose by 324,000 in July, according to payroll processor ADP, indicating ongoing business hiring amidst steady economic growth. This exceeded economists’ expectations of a gain of 175,000 jobs. While the ADP payroll numbers provide insights into monthly job creation, their ability to predict the official government employment report is limited. Nevertheless, these reports tend to align over time.
The government is expected to report on Friday that 200,000 new jobs were created in July when accounting for government hires, which are excluded from ADP’s report. In June, ADP revised its initial figure of 497,000 new jobs to 455,000 jobs created. In contrast, the government reported a smaller increase of 209,000 jobs in June.
Big Picture
While the U.S. labor market has slightly weakened, it still remains robust compared to the previous year. Companies are hiring fewer individuals and on a smaller scale. However, the job market’s strength continues to exert upward pressure on wages and potentially contribute to inflation. As workers seek higher salaries to cope with the rising cost of living, their bargaining power has increased.
Market Reaction
In Wednesday trades, the Dow Jones Industrial Average (DJIA) and S&P 500 were expected to open lower: DJIA with a 0.20% decrease and SPX with a 0.27% decrease.