ADP data exceeds expectations, will Friday's non-farm payrolls add fuel to the fire again?

According to ADP data, in September, the number of jobs in the US private sector increased by 143,000, higher than the expected 120,000, with the previous month of August showing the weakest growth since March 2023. Despite the rebound, the average number of new jobs added over the past three months has dropped to 119,000, one of the lowest levels since 2020. Other data also indicates a slowdown in the labor market: recent unemployment rates have been steadily rising, and some other employment growth indicators have cooled, prompting the Federal Reserve to cut interest rates in September by a larger margin than usual to prevent further weakness. After the data was released, spot gold prices rose above 2650. Federal Reserve Chairman Powell described the labor market as robust on Monday local time, but also noted that the situation has "clearly cooled" over the past year. He added, "We believe that we do not need to see further cooling in the labor market conditions" to achieve the 2% inflation target. ADP's data precedes the non-farm payroll report to be released on Friday, which is expected to show moderate job growth in September, with the unemployment rate remaining at 4.2%. Another data released on Tuesday shows that although job vacancies unexpectedly increased in August, the hiring rate remained at its lowest level since 2013, excluding the early stages of the pandemic. Another indicator from the Institute for Supply Management shows that the proportion of people reporting an increase in manufacturing employment has been the smallest since May 2020. This is the situation shown in the report released by ADP on Wednesday, with wage growth slowing in September. For job switchers, income grew by 6.6% year-on-year, the slowest pace since April 2021. For those staying in their current positions, wage growth slightly slowed to 4.7%. ADP's Chief Economist Nela Richardson said, "Stronger hiring has not required higher wage growth, typically job switchers see faster wage growth." Recruitment has increased across various industries, with leisure and hospitality as well as construction leading the way. The information industry was the only one that saw layoffs last month. Job growth is also widespread geographically, with only companies with fewer than 20 employees reducing their workforce. While layoffs remain relatively low, some companies have announced layoff plans in recent days. ADP's findings are based on payroll data covering over 25 million US private sector employees. After the data release, traders expect that when the Federal Reserve meets in November, there will be a rate cut of approximately 33 basis points, meaning the chance of officials opting for a second 50 basis point cut is slightly lower - but still quite high. They expect a total rate cut of about 69 basis points by the end of this year, compared to around 70 basis points before the data was released. ** ADP's figures provide traders with an early litmus test for the September employment report set to be released on Friday. Following the Fed's 50 basis point rate cut last month, Powell stated that the Fed is confident "that it can sustain the strong labor market in the context of moderate growth and inflation trending down to 2%". However, Powell also warned against assuming that the 50 basis point rate cut sets the pace that policymakers will continue to follow—emphasizing that everything will depend on the performance of the data