ADP Employment Change 4-week Average comes in at -11.25K
For the four weeks ending October 25, private employers shed an average of 11,250 jobs a week, the Automatic Data Processing (ADP) reported on Tuesday.

For the four weeks ending October 25, private employers shed an average of 11,250 jobs a week, the Automatic Data Processing (ADP) reported on Tuesday.

Nela Richardson, chief economist, ADP, noted that this data suggests that the labor market struggled to produce jobs consistently during the second half of October and added:

"There’s growing sentiment that job growth will remain slow for the indefinite future due to a reduced demand for and short supply of workers."

Market reaction

The US Dollar (USD) came under renewed selling pressure with the immediate reaction to this data. At the time of press, the USD Index was down 0.27% on the day at 99.35.

Employment FAQs

Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.

The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.

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