US ADP in August falls below expectations, wage growth hits a nearly two-year low.
After the release of ADP data, the probability of the Federal Reserve raising interest rates by 25 basis points cumulatively until November has slightly increased.
ADP Employment in August Lower than Market Expectations
In August, ADP employment in the United States was 177,000, lower than the expected 195,000 and the previous value of 324,000.
Employment in the financial services industry remained unchanged in August, with a decrease of 5,000 in July.
Employment in the trade/transportation/utilities sector increased by 45,000 in August, compared to an increase of 30,000 in July.
Employment in the manufacturing sector increased by 12,000 in August, compared to a decrease of 36,000 in July.
Employment in the construction sector increased by 6,000 in August, compared to an increase of 9,000 in July.
Nela Richardson, Chief Economist at ADP, stated that this month's data is consistent with the pace of job creation before the pandemic. After experiencing two years of special growth related to economic recovery, as the impact of the pandemic on the economy gradually subsides, wages and employment are moving towards more sustainable growth.
Wage Growth Continues to Slow in August
Wages for employees increased by 5.9% year-on-year in August, the slowest growth since October 2021.
For job switchers, wage growth also slowed down to 9.5%. Wage growth slowdown was observed for the first time in all 50 states and Washington, D.C.
Among them, the median annual wage growth rate for professional/business services employees in August was 5.8%, compared to 6.0% in July.
Expectations for Interest Rate Hike Increase
After the release of ADP data, the probability of the Federal Reserve raising interest rates by 25 basis points cumulatively by November has slightly increased.
According to CME's "FedWatch": The probability of the Federal Reserve keeping interest rates unchanged at 5.25%-5.50% in September is 88.5%, while the probability of raising interest rates by 25 basis points to the 5.50%-5.75% range is 11.5%; the probability of keeping interest rates unchanged by November is 49.2%, the probability of a cumulative 25 basis points rate hike is 45.7% (previously 43.3%), and the probability of a cumulative 50 basis points rate hike is 5.1%.
The yield on 30-year U.S. Treasury bonds has resumed its upward trend, reaching a daily high near 4.27%.