Pre-market futures have fluctuated a bit, with new labor market data out ahead of the opening bell. Futures had been slightly negative, then went slightly positive on the economic news, and now we’re back in the red: the Dow is -15 points, the S&P -5 and the Nasdaq -25 points. Ten-year bond yields have now climbed above +4.7%, and the spread between it and 2-year yields is now the highest we’ve seen in, literally, years.
ADP Private-Sector Payrolls Lower than Expected
The expected jobs numbers out this morning came from Automatic Data Processing ADP, which posted +122K new private-sector jobs filled in December, which is below expectations for +136K and the previous month’s unrevised +146K. It’s also the lowest private-sector jobs print since August of last year.
As expected, the Services sector grew jobs at a much higher rate than Goods-producing private-sector employment, +112K versus +10K, respectively. Large companies (over 500 employees) led the way, with +97K new jobs filled last month, followed by +9K from medium-sized firms (50-499 employees) and +5K for small businesses.
By industry, Education/Healthcare jobs brought in +57K, followed by Construction at a distant second, +27K. Leisure/Hospitality gathered +22K private-sector job fills for December. Gone are the days of hospitality jobs powering the labor force forward during the Great Reopening after the Covid crisis, but that’s a few years in the rear view mirror now. Manufacturing jobs lost another -11K last month, continuing recessionary conditions in goods-producing domestically.
One unique gauge specific to ADP numbers is the Job Stayers vs. Job Changers category. This metric has only been in place for five or six years, but these are “historic” lows: +4.6% wage growth for Stayers and +7.1% for Changers. More indications we’re seeing a cooling labor market overall.
Weekly Jobless Claims a Day Early
Because the markets will be closed tomorrow in observance of the passing of Jimmy Carter, the 39th president of the U.S. (1977-80), Thursday mornings normal Weekly Jobless Claims have been moved a day early. Initial Jobless Claims came in at +201K, below the +215K anticipated and the unrevised +211K last week.
This is also the lowest single week of new jobless claims since mid-February of last year. Although we do expect some of this is end-of-year related, meaning we may see a future revision to this number or at least a reversion back to “normal” jobless claims levels in the weeks to come. Then again, we don’t really know this for sure.
Continuing Claims rose to 1.867 million from the previous week’s 1.834 million. These figures are still nicely below the 1.9 million threshold, which we have broached a couple times in the past two months. However, employers don’t look to be in a hurry to push the workforce to higher weekly claims at this stage.
What to Expect from the Stock Market Today
General news headlines today are focused on the dangerous wildfires breaking out near Los Angeles, the second-largest city in the U.S. Aside from the harm and devastation done to households and other property, we might expect some economic impact in the near-to-medium future.
This afternoon, we’ll see the release of the minutes of the latest Federal Open Market Committee (FOMC) meeting, which saw a “bearish cut” of 25 basis points (bps) to the Fed funds rate, bringing levels down to +4.25-4.50%, 100 bps down from where we were a year ago. We don’t know how much we’ll learn from parsing these minutes later today, but we’re always open for a surprise, one way or the other.
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