"Small non-agricultural" hit a new low since the beginning of the year! Why is the market indifferent?

On Wednesday, the U.S. ADP employment report, known as the "small non-farm", showed that job growth slowed in May due to a sharp decline in manufacturing. Hiring in the leisure and hotel industry also showed weakness.

The number of ADP jobs in the United States increased by 152,000 in May, the smallest increase since January this year, lower than the expected 175,000. The previous value was revised down from 192,000 to 188,000.

After the data was released, the US dollar index and spot gold did not fluctuate much in the short term. The yield on two-year US Treasury bonds fell to a new intraday low, but did not fall below Tuesday's low of just below 4.75%; the yield on 10-year US Treasury bonds fell to 4.312%, the lowest level since April 5.

ADP Chief Economist Nela Richardson said that job growth and wage growth are slowing as we enter the second half of the year. The labor market is solid, "but we are monitoring clear weakness related to producers and consumers. Almost all hiring came from the service industry, with goods producers contributing only 3,000 jobs."

The ADP report also showed year-over-year wage gains for job hoppers fell for a second straight month in May. Job hoppers saw their pay rise 7.8%, while non-job hoppers’ pay remained steady for the third straight month, rising 5%.

From the perspective of detailed data,

The number of people employed in the construction industry increased by 32,000 in May and 35,000 in April; the median annual wage growth rate was 5.3%, compared with 5.9% in April.

The number of manufacturing jobs decreased by 20,000 in May and increased by 9,000 in April; the median annual wage growth rate was 4.7%, compared with 4.6% in April.

Employment in trade/transportation/utilities increased by 55,000 in May and 26,000 in April; the median annual wage growth rate was 4.6%, compared with 4.7% in April.

Employment in the financial services sector increased by 28,000 in May and 16,000 in April; the median annual wage growth rate was 5.1%, compared with 5.1% in April.

Employment in professional/business services decreased by 6,000 in May after increasing by 22,000 in April; the median annual wage growth rate was 4.8%, compared with 4.9% in April.

Although the employment data released by ADP was lower than the median forecast, it was still within the expected range of economists. The US secured overnight financing rate (SOFR) fell only slightly by one basis point and was almost the same as before the release of ADP data.

Analysts viewed the report as the latest sign that employment is not losing ground under the weight of the Federal Reserve's rate hikes. However, other data showed the job market is becoming more balanced.

Earlier, the U.S. Labor Department reported on Tuesday that job openings fell to the lowest level in more than three years in April, and the ratio of job openings to unemployed people has returned to pre-pandemic levels in early 2020.

“There is growing evidence that the Fed should start easing policy,” said Ronald Temple, chief market strategist at Lazard Asset Management.

Later in the day, the market will also pay close attention to the US ISM non-manufacturing PMI for May to be released at 22:00 Beijing time. The strong momentum of the US service industry has always been a major source of concern for the Federal Reserve about stubborn inflation.

On Wednesday, the U.S. ADP employment report, known as the "small non-farm", showed that job growth slowed in May due to a sharp decline in manufacturing. Hiring in the leisure and hotel industry also showed weakness.

The number of ADP jobs in the United States increased by 152,000 in May, the smallest increase since January this year, lower than the expected 175,000. The previous value was revised down from 192,000 to 188,000.

After the data was released, the US dollar index and spot gold did not fluctuate much in the short term. The yield on two-year US Treasury bonds fell to a new intraday low, but did not fall below Tuesday's low of just below 4.75%; the yield on 10-year US Treasury bonds fell to 4.312%, the lowest level since April 5.

ADP Chief Economist Nela Richardson said that job growth and wage growth are slowing as we enter the second half of the year. The labor market is solid, "but we are monitoring clear weakness related to producers and consumers. Almost all hiring came from the service industry, with goods producers contributing only 3,000 jobs."

The ADP report also showed year-over-year wage gains for job hoppers fell for a second straight month in May. Job hoppers saw their pay rise 7.8%, while non-job hoppers’ pay remained steady for the third straight month, rising 5%.

From the perspective of segmented data,

The number of people employed in the construction industry increased by 32,000 in May and 35,000 in April; the median annual wage growth rate was 5.3%, compared with 5.9% in April.

The number of manufacturing jobs decreased by 20,000 in May and increased by 9,000 in April; the median annual wage growth rate was 4.7%, compared with 4.6% in April.

Employment in trade/transportation/utilities increased by 55,000 in May and 26,000 in April; the median annual wage growth rate was 4.6%, compared with 4.7% in April.

Employment in the financial services sector increased by 28,000 in May and 16,000 in April; the median annual wage growth rate was 5.1%, compared with 5.1% in April.

Employment in professional/business services decreased by 6,000 in May after increasing by 22,000 in April; the median annual wage growth rate was 4.8%, compared with 4.9% in April.

Although the employment data released by ADP was lower than the median forecast, it was still within the expected range of economists. The US secured overnight financing rate (SOFR) fell only slightly by one basis point and was almost the same as before the release of ADP data.

Analysts viewed the report as the latest sign that employment is not losing ground under the weight of the Federal Reserve's rate hikes. However, other data showed the job market is becoming more balanced.

Earlier, the U.S. Labor Department reported on Tuesday that job openings fell to the lowest level in more than three years in April, and the ratio of job openings to unemployed people has returned to pre-pandemic levels in early 2020.

“There is growing evidence that the Fed should start easing policy,” said Ronald Temple, chief market strategist at Lazard Asset Management.

Later in the day, the market will also pay close attention to the US ISM non-manufacturing PMI for May to be released at 22:00 Beijing time. The strong momentum of the US service industry has always been a major source of concern for the Federal Reserve about stubborn inflation.