U.S. ADP added only 103,000 jobs in November. The market is betting that the Fed will cut interest rates as soon as March next year | Anue Juheng-U.S. Stock Radar

On Wednesday (6th), the United States released the ADP employment report, known as “small non-agricultural employment”, which showed that the number of U.S. private enterprise employment increased by 103,000 in November after seasonally adjustment, which was far lower than the 130,000 expected by economists. The month-ago value was revised sharply down from 113,000 to 106,000. Data revealed that the U.S. job market is cooling.

Some analysts believe that the easing of labor market conditions and falling inflation have led financial markets to believe that the Federal Reserve’s (Fed) monetary policy tightening has ended and that interest rates may be cut as soon as March next year. Markets currently expect the Fed to keep interest rates unchanged at next Wednesday’s monetary policy meeting.

According to the CME Group FedWatch Tool, the market estimates that the probability of the Fed cutting interest rates by 1 point (25 basis points) at the monetary policy meeting next March is 54.9%, and the probability of keeping interest rates unchanged is 37.2%.

While the number of employed people has slowed, wage growth has also cooled further. In November, the wages of those who stayed employed increased by 5.6% compared with the same period last year. The growth rate has declined for the 14th consecutive month, falling to the slowest growth level since June 2021; job-hopping The salary increase of workers was 8.3%, which was also the smallest increase since 2021. However, the two real salary growth rates are still much higher than the inflation target set by the Fed.

However, U.S. private companies scaled back hiring in November amid rising borrowing costs and lingering price pressures.

By industry, employment in service-related industries has increased, with manufacturing declining and employment decreasing by 14,000. Among them, education and health services, trade and transportation, and financial activities have driven employment growth, increasing by 44,000, 55,000, and 11,000 respectively.

At the same time, employment in the manufacturing and construction industries continued to decline, with decreases of 15,000 and 4,000 respectively. It is worth noting that the leisure and hotel industry, which originally drove the employment recovery after the new crown epidemic, lost 7,000 employees last month, the first decline in nearly three years.

Nela Richardson, chief economist at ADP, said restaurants and restaurants are the largest job creators in the post-COVID-19 recovery. But that boost has passed, and a return to industry trends suggests the overall economy will see more modest hiring and wage growth next year.