Shine Trader Limited reports:
ADP’s goods-producing sector, which accounted for most of the increase, added 45,000 jobs, up 30,000 from July. ADP added 30,000 jobs in construction in August, up 27,000 from July, which accounted for most of the new jobs and gains in ADP’s goods-producing sector.
ADP construction employment rose significantly in August, driven by continued U.S. fiscal stimulus since the pandemic and a better U.S. housing market.
ADP added 90, 000 jobs in natural resources and mining in August, up 60, 000 from July.
ADP manufacturing added 6,000 jobs in August, down by a modest 2,000 from July, a decline that has continued since May 2021.
1.2. Leisure and hospitality supported the service sector as a major contributor to ADP job creation
U.S. ADP service sector job creation was significantly supported by new employment in leisure and hospitality. The ADP service employment statistics cover trade, transportation and infrastructure, information, financial services, professional and business services, education and health services, and leisure and hospitality.
In terms of job creation, ADP added 201,000 jobs in the leisure and hospitality sector in August, up 62,000 from July.
The education and health services sector added 59,000 jobs in August, down by 5,000 from July.
The professional and business services sector added 19,000 jobs in August, down 35,000 from July.
ADP added 18,000 jobs in trade, transportation and infrastructure in August, down 19,000 from July.
ADP added 13,000 jobs to its financial services sector in August, up 4,000 from July.
In August, ADP added 0, 000 jobs in the information industry, turning from negative to zero, but still stuck in stagnation.
Nonfarm payrolls added 235,000, the smallest increase since January 2021
U.S. non-farm employers added 235,000 jobs in August, according to data released by the Labor Department on Friday, sharply below 1.05 million and expectations of 733,000, marking the smallest increase since January 2021. Non-farm payrolls in the government sector were minus 8,000, while private payrolls were 243,000, led by 203,000 in private service production, which accounted for the lion’s share of August’s non-farm payrolls.
2.1. Manufacturing led to a slight decline in new employment in private sector goods production
Manufacturing was the biggest contributor to a slight decline in private-sector job creation in goods production in August, according to labor Department data. The number of jobs created in both construction and manufacturing fell sharply in August from July:
The number of construction jobs added in August was minus 3,000, down by 9,000 from July.
Manufacturing added 37,000 jobs in August, 15,000 fewer than in July. Starting in May 2021, job creation in the U.S. manufacturing sector began to support job creation in the U.S. private sector for goods production, but the decline in manufacturing employment in August was also the biggest contributor to the decline in private sector for goods production in August.
In addition to the supply chain difficulties, lack of raw material prices, warehouse inventory, labor shortages, in the short term, the Delta strain the spread of the new champions league is the main obstacle of manufacturing recovery speed up to, but with the popularity of existing vaccines and new vaccines for the medium and long term development, Delta new crown strain on U.S. manufacturing jobs and the overall job market will be just a disturbance.
2.2. Leisure and hospitality led to a decline in us private sector job creation in service production
August’s decline in private sector employment in service production was led by declines in leisure and hospitality, education and health services, retail and wholesale employment.
Of this, the leisure and hospitality sector added 0, 000 jobs in August, down 415, 000 from July, and accounted for 78.2 per cent of the decline in private sector employment in services production.
The education and health services sector added 35,000 jobs in August, up 27,000 from the previous month.
The number of jobs created in the U.S. retail sector has been negative since July, and the number of jobs created in August was minus 28,000, down another 20,000 from July.
The us wholesale sector added 10, 000 jobs in August, down 12, 000 from July.
Financial activities added 16,000 jobs in August, down 8,000 from July.
Professional and business services added 74,000 jobs in August, down by 5,000 from July.
The information sector added 17,000 jobs in August, down by 4,000 from July.
Transportation and storage employers added 53,000 jobs in August, down 2,000 from July.
U.S. utilities added -101,000 jobs in August, down by 101,000 from July.
In terms of the new employment of private service production industry in the United States, the new employment of all service production industries has decreased to varying degrees.
We expect the US service sector employment market to emerge from the slowdown and continue to recover, mainly for the following reasons:
(1) The gradual transition of the US economic recovery from manufacturing to services;
(2) The current growth of job vacancies in the United States is mainly concentrated in hotels, bars, restaurants, casinos, museums and other entertainment venues, that is, concentrated in leisure and service industries;
(3) Under the premise that the United States continues to push ahead with existing vaccination and new vaccine development, the impact of the Delta strain of COVID-19 is limited and only a short-term disturbance.
Non-farm employment is uneven and the employment recovery has slowed for the time being
The overall employment recovery in the US is uneven, mainly including the following aspects:
(1) From the perspective of composition, non-farm employment in the US is mainly driven by new employment in the service production sector, and is greatly affected by new employment in the leisure and hotel industry, while the impact of new employment in the commodity production sector such as manufacturing is relatively small;
(2) In terms of the process, employment in grocery stores rose sharply during the epidemic, but employment in catering industry declined significantly due to the epidemic and the high unemployment benefits policy;
(3) There is a sharp contrast between labor shortage and resignation rush: The year-on-year rise in average hourly wage and the decline in weekly working hours suggests that companies are using methods such as reducing working hours and increasing wages to attract workers. However, in June, there were 10.07 million job openings in JOLTS in the US, and the increase in job-hopping wages reached 5.8%, indicating a high turnover rate of employees and more people looking for better-paying job-hopping opportunities.
We believe that the US employment recovery will slow in the short term and gradually return to strength in the medium term before the Fed releases Taper signals, mainly for the following reasons:
(1) In August, the average hourly wage in the US rose to 4.3% year on year, much higher than the pre-EPIDEMIC level of 2.9%, indicating rising labor prices, strong labor demand and rising labor wages, attracting more unemployed people to return to the US job market;
(2) Federal unemployment benefits have been terminated or reduced in some states, the number of initial and continuing claims for unemployment benefits has been declining, and some American residents receiving unemployment benefits have returned to the job market;
(3) With the COVID-19 lockdown ending in most US states, the demand for services such as leisure and hospitality will further expand, driving the recovery of services and thus increasing the number of new jobs in services;
(4) Although the Delta coronavirus strain has cast a shadow on the us economic recovery, with the ongoing promotion of COVID-19 vaccination, the recurrence of the epidemic is only a disturbance to the us economic recovery in the short and medium term, and has a limited impact on the recovery of the US job market.
It remains highly likely that the Fed will release Taper signals this year
There are still 4.729 million jobs missing from pre-PANDEMIC levels, and it will take about nine months to fill the gap based on average growth in non-farm employment from January to August 2021, one month later than the nine-month gap we estimated in August, indicating a significant slowdown in employment recovery.
In September, the Federal Reserve announced that the start of Taper Taper would be further reduced. However, as wage data and unemployment data are still relatively positive, the spread of the Delta coronavirus is only a short-term disturbance, and the start of Taper will remain a high probability event this year. The focus will be on the US non-farm payrolls data in October and November.
The U.S. non-farm payrolls report for September will be released before the Fed’s November FOMC meeting, and there is still a chance that the U.S. labor market will Taper in November if the number of jobs in September is strong enough to demonstrate “substantial further development.”
Reprint indicated source：Shine Trader Limited Live information