The United States job market remains strong, but wage growth is slowing significantly.
Although employment is strong, the inflation driven by wages may have a relatively small impact on the economy. In addition, recency bias has been a powerful force in the financial markets recently, so the market is likely to price in more upside risk in tomorrow's non-farm payroll report.
On Thursday, the US released its May ADP employment data and the number of initial jobless claims for the week.
The data shows that the US job market remains strong, which could mean that tomorrow's non-farm payroll data may also be stronger than expected.
Employment remains healthy
In May, the ADP employment in the US was 278,000, with an expected 170,000, a previous value of 296,000, and a revised value of 291,000.
The number of initial jobless claims in the US for the week ending May 27 was 232,000, with an expected 235,000, a previous value of 229,000, and a revised value of 230,000.
The previous ADP data was the best performance since June 2022, and this time it was only a slight decline.
Nela Richardson, chief economist at ADP, said this was the second month in a row that we saw a one-percentage-point drop in wage growth for job switchers. Wage growth is slowing significantly, and although employment is strong, the impact of wage-driven inflation on the economy may be small.
In addition,
Bullish or bearish for the stock market?
The US dollar is stronger globally, but for the Federal Reserve, a small piece of good news is that inflation driven by wages may no longer be so worrying.
However, some people point out that recency bias is a powerful force in financial markets, so the market is likely to price in more upside risk in tomorrow's non-farm payroll report.