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Solid Private Payrolls, But Small Cracks Appearing

US
The ADP private payrolls beat (+239K vs +185K expected), which included a downward revision to September, (+192K vs +208K), provides a small clue that Friday's highly-anticipated employment report may produce yet another solid figure. However, it appears that there are some cracks beginning to become evident in the US labor market as the Fed tightening cycle continues..
  • ADP's chief economist: "This is a really strong number given the maturity of the economic recovery but "job changers are commanding smaller pay gains" and "the hiring was not broad-based.
  • The latter is a reference to weak goods producer payrolls, which contracted by 8k (-20K manufacturing, +11k natural resources/mining, +1k construction). ADP cited producers "pulling back" due to sensitivity over rising interest rates".
  • Services payrolls were solid overall (+247k) but that's mainly composed of leisure/hospitality (+210k) and trade/transportation/utilities (+84k), with the other sectors contracting.

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