Wednesday, October 2, 2013
A continued government shutdown and a weaker-than-expected
labor market reading from payroll processor
Automatic Data Processing
) provide the backdrop for today's action. With Friday's monthly
jobs report from the government's Bureau of Labor Statistics
likely delayed due to Washington squabbles, this morning's ADP
report will most likely be the only jobs reading we will get this
The ADP report came in weaker than expected, with private
sector job gains in September at 166K and a 17K negative revision
to the prior month's number to 159K from 176K. The report showed
broad-based gains, with small businesses (less than 50 employees)
adding +74K jobs in September. Medium-sized businesses (less than
500 employees) added +28K jobs, while large businesses (1000+
employees) added +64K jobs during the month.
The goods-producing sectors added +19K jobs in September, with
Construction and Manufacturing adding 16K and 1K jobs,
respectively. Most of the September jobs came from the
services-providing sectors, with gains of 147K. The ADP report
has been averaging in the 150K to 200K range for quite some time
and today's reading is broadly in-line with that trend, though
admittedly towards the lower end of that range.
The U.S. economy was broadly on the softer side in the third
quarter, with GDP growth expected to be in the +1.5% vicinity.
But momentum has been steadily improving, as Monday's
manufacturing ISM and the downtrend in Jobless Claims in recent
The ongoing congressional impasse isn't expected to have a
material impact on the economy, but a prolonged discord will no
doubt be destabilizing. The Fed's no-Taper decision last month
was most likely driven by these concerns. The markets have thus
far taken the Washington drama in the stride, but the mood would
most likely shift if there is no movement towards some sort of
resolution soon enough.
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Director of Research