Private payrolls post smallest growth since January 2021

Published On Sep 5, 2024, 9:11 AM

According to the latest ADP report released on September 5, 2024, the private sector has added only 99,000 jobs in August, the smallest monthly increase since January 2021. This figure fell short of economists' expectations, which anticipated 145,000 jobs to be added. The report indicates a trend of decreasing job creation over the past five months. ADP chief economist Nela Richardson noted that while job churn is low and employees are staying with their jobs, the overall labor market is cooling. This slowdown raises concerns about how it might influence the Federal Reserve's decisions on interest rates, with current market expectations leaning towards potential interest rate cuts as inflation eases.

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Stock Forecasts

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Positive

The slowing job growth reflects a cooling labor market, which may influence the Federal Reserve's decisions regarding interest rates. If the labor market continues to weaken, it could lead to more aggressive rate cuts by the Fed. This scenario might benefit sectors sensitive to interest rates, such as real estate and utilities, as lower rates generally stimulate investment and borrowing in these areas.

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Negative

The underperformance in job growth, coupled with reduced openings in the labor market, could prompt declines in sectors reliant on consumer spending, such as consumer discretionary. Companies in this space may see slower sales growth, which could negatively affect their stock prices.

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