The U.S. labor market picture is improving, according to two reports released this week.
First is the U.S. Department of Labor Initial Claims report released on Thursday morning. These are claims filed by unemployed individuals with the Labor Department after losing their jobs to claim unemployment benefits. (See Insiders’ Hot Stocks on TipRanks)
Initial Jobless Claims declined to 326,000 in the week ending October 2 of 2021, from 364,000 in the previous week. That means more people are finding jobs.
Then there’s the September ADP Employment report published on Wednesday morning. That’s a monthly survey of the change in total U.S. nonfarm private jobs based on actual payroll data of ADP clients.
America’s private businesses hired 568,000 workers in September of 2021, up from a revised 340,000 in August, and ahead of market expectations of 428,000 hires. That’s the utmost improvement in private job gains in three months, led by gains in the service sector like hospitality and leisure (266,000), education/health services (66,000), and professional/business services (61,000).
“The labor market recovery continues to make progress despite a marked slowdown from the 748,000 job pace in the second quarter,” said Nela Richardson, chief economist of ADP. “Leisure and hospitality remain one of the biggest beneficiaries to the recovery, yet hiring is still heavily impacted by the trajectory of the pandemic, especially for small firms.
“Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months.”
The lower Initial Claims, and the strong ADP report, bode well for the Bureau of Labor Statists (BLS) September nonfarm payroll report and unemployment report to be released on Friday.
Both reports are closely followed by the Federal Reserve, as it tries to determine where the U.S. economy is with regards to its mandate of maximum employment. Markets expect U.S. nonfarm payrolls to be 500,000, up from 235,000 in August, and unemployment to remain steady at 5.1%.
If they, too, confirm that the labor market picture is improving, they will suggest that labor shortages are easing, solving the riddle of high unemployment coexisting with labor shortages.
That would be a mixed blessing for Wall Street, as it will speed the Fed’s tapering, the rolling back of its bond-buying program. That’s why traders and investors will watch closely how the nonfarm payroll and unemployment numbers will come out tomorrow.
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