The ADP Research Institute is set to release its Employment Change report for June on Wednesday at 12:15 GMT, revealing critical insights into the US private sector’s job market. Analysts expect job growth in February to be 95,000 jobs added, exactly the consensus estimate. Last month’s report had a net increase of just 37,000 jobs. This large decrease has led many to speculate that a hiring activity slowdown is on the horizon.
WFH June was marked by a sharp June slowdown in US private sector hiring, as employers slashed 33,000 jobs. This figure is an alarming 279,000 jobs short of the expected growth, marking a dangerous turn in employment. Traders frequently consider ADP’s employment figures as a leading indicator of the Bureau of Labor Statistics’ Nonfarm Payrolls release, underscoring the importance of this upcoming report.
Job Market Dynamics
In a recent webinar Nela Richardson, Chief Economist at ADP, noted that layoffs remain rare. Employers are afraid to hire new employees or at least afraid to replace the ones that retire and leave. This reticent approach resulted in a net loss of private sector jobs last month.
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month. Still, the slowdown in hiring has yet to disrupt pay growth.” – Nela Richardson, Chief Economist at ADP
The economic environment has quickly shifted to one of uncertainty, causing many companies to reassess their approach to hiring. This continued reluctance to build up the workforce might be due in part to uncertain economic predictions, or even changing patterns in consumer demand.
The correlation between ADP’s Employment Change and the Bureau of Labor Statistics’ Nonfarm Payrolls is well-established. Big differences can occur in a given month. Market participants will be looking to this report to understand how those factors might shape their investment strategies.
Economic Implications
Market participants have their eyes peeled for the bigger economic picture. They expect changes in monetary policy direction from the Federal Reserve Board. As we enter the fourth quarter, expectations are high for a 50-basis-point easing by the Fed later this year. This action seeks to respond to the changing economic landscape.
If inflation remains persistently under 2%, the Fed should consider a path of interest rate cuts. Moreover, should unemployment hit dangerously high levels, they might be forced to do the same. Combined, these measures would greatly increase borrowing and spending. In doing so, they can increase downward pressure on the US Dollar Index (DXY), which is itself reeling at multi-year lows.
It is this interplay between employment data and the course of monetary policy that will be key in determining market direction over the next several months.
“Plus, momentum indicators are still leaning toward the negative side: the Relative Strength Index (RSI) has dropped to the oversold region around 28, and the Average Directional Index (ADX) is hovering above 17, so the trend isn’t exactly blazing with intensity.” – Piovano
Looking ahead, the next ADP Employment Change report is scheduled for July 2, 2025, at 12:15 GMT. As businesses reconsider their future hiring plans, the Fed is now reconsidering its monetary policy. Employment figures are likely to be closely scrutinized by market analysts throughout this process.
Future Outlook
Looking ahead, the next ADP Employment Change report is scheduled for July 2, 2025, at 12:15 GMT. As businesses assess their hiring strategies and the Fed considers its monetary policy options, market analysts will continue to scrutinize these employment figures closely.