ADP Payrolls Unexpectedly Crater To -32,000, Worst Since March 2023 And Below All Estimates

Ahead of today’s ADP print we said that traders will be especially focused on the otherwise unreliable number, since the government shutdown which hit at midnight means that this Friday’s payrolls report will likely not happen. Well, if that is the case, the market – and Fed – may well be expecting a jumbo 50bps rate cut again in 3 weeks, because moments ago ADP reported that in September, the US private sector shed 32,000 jobs, the worst print since March 2023…

… and far below the lowest estimate; in fact the print was a 6 sigma miss to estimates of which Pantheon’s +25K was  the lowest.

Adding to the confusion is that the original number was actually well higher, at 11K, but after the ADP conducted its annual preliminary rebenchmarking of the National Employment Report in September based on the full-year 2024 results of the Quarterly Census of Employment and Wages, there was a reduction of 43,000 jobs in September compared to pre-benchmarked data. The trend was unchanged; job creation continued to lose momentum across most sectors.

“Despite the strong economic growth we saw in the second quarter, this month’s release further validates
what we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” said Dr.
Nela Richardson, chief economist, ADP.

As shown in the next chart, the decline was broadbased, with both goods and service producing sectors seeing a slide in jobs.

Developing