Friday’s labor market report will be a key factor for the Federal Reserve’s Federal Open Market Committee meeting Sept. 20-21.
Wednesday’s ADP report indicates that the labor market data likely will continue to improve at a steady pace, providing more incentive for aggressive rate increases from the Federal Reserve as discussed in comments last week.
Wednesday’s ADP report showed an increase of 177,000 jobs in the private sector. The report beat consensus which called for an estimated increase of 175,000 jobs. In comparison to last month, the report was just below the revised increase of 194,000 jobs added.
Market indexes continued to trade lower Wednesday despite the positive report from ADP released at 8:15 a.m. (EDT). The Dow Jones Industrial Average was lower in opening market trading, down -0.17%. Stocks leading losses in the DJIA included:
- DuPont (DD, Financial) -0.98%.
- United Technologies (UTX, Financial) -0.74%.
- Caterpillar (CAT, Financial) -0.61%.
- UnitedHealth (UNH, Financial) -0.60%.
- Chevron (CVX, Financial) -0.58%.
U.S. market index futures also continued to trend lower. Dow futures were down 31.00 points at 18,413.0 at the market open. Standard & Poor's 500 futures were down 3.25 points to 2,172.0. Nasdaq futures were also lower at 4,770.25, down 5.75 points.
The positive ADP report indicates that the broad market will likely meet expectations Friday for payroll gains. Economists are forecasting an increase of 175,000 jobs, which would be lower than the July report of 255,000. Economists are also expecting the unemployment rate to fall to 4.8%.
While the labor market is not expected to report a significant month-over-month increase in payrolls, an addition of 175,000 jobs in August would likely be sufficient for more aggressive rate increase timing from the Federal Reserve.
On Tuesday, Fox Business interviewed Philadelphia Federal Reserve President Charles Plosser, who gave his insight on how Friday’s jobs report will influence the FOMC.
Disclosure: I do not own any stocks included in this article.
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