"The ADP Nonfarm Employment Change" far exceeded expectations, reaching the highest level in over a year! Expectations for the Federal Reserve to "pause interest rate cuts" are rising

According to the Zhitong Finance APP, the U.S. ADP employment data, known as the "little non-farm," shows that in October, the pace of employee recruitment by U.S. companies reached its fastest rate in over a year, indicating a remarkable demand for labor. According to the latest data from the ADP Research Institute, the number of jobs in the U.S. private sector increased by 233,000 in October, significantly exceeding expectations. The September ADP employment figure was unexpectedly revised up from 143,000 to 159,000. Following the release of the latest ADP employment data, some traders began to bet that the Federal Reserve might announce a "pause in interest rate cuts" in December, with some even speculating that a pause could occur as early as November.

The latest ADP employment data surpassed all economists' expectations compiled by Bloomberg, far exceeding the general expectation of 114,000 jobs. Statistical data shows that the manufacturing sector was the only one to lose some jobs, while the education and healthcare sectors, as well as the trade and transportation sectors, saw the strongest increases in hiring.

The U.S. ADP employment data is referred to as the "little non-farm" by the market and holds significant predictive value for the "U.S. non-farm payroll data," which is a key focus for financial markets. Like the official U.S. non-farm payroll data, the ADP employment data has a substantial impact on the foreign exchange, gold, crude oil trading markets, and global stock markets.

ADP data shows that despite two hurricanes hitting the southeastern U.S. and thousands of Boeing workers participating in a large-scale strike, the U.S. labor market remained healthy.

"Even during the recovery from the hurricanes, the job growth in October was very strong," said ADP Chief Economist Nela Richardson in a statement. "The hiring pace of U.S. companies accelerated significantly in October, reaching the highest level in over a year, with labor demand surprisingly robust."

The latest wage growth data has slowed to its lowest level since 2021. The ADP employment data, released in collaboration with the Stanford Digital Economy Lab on Wednesday, also showed that wages for job switchers grew by 6.2%, while wages for those who stayed increased by 4.6%.

Statistical data indicates that job growth was strongest in the southern U.S. Among employer size categories, those with at least 500 employees added the largest number of new positions.

ADP's employment survey results are based on payroll statistics covering over 25 million U.S. private sector employees. However, according to Goldman Sachs economists, these data have historically been less sensitive to natural disasters and large-scale worker strikes compared to the monthly non-farm payroll report that the U.S. government will release on Friday.

In terms of recently released economic data, the latest retail sales figures continued to grow month-on-month, with non-farm payroll data exceeding expectations, an unemployment rate stronger than anticipated, and a long-term GDP growth rate revised upward beyond expectations. Additionally, the number of initial jobless claims in recent weeks has generally met expectations, coupled with a steady decline in U.S. inflation. These data points paint a scenario that perfectly aligns with the "soft landing" of the U.S. economy that Federal Reserve officials envision In this context, this is also why some economists are shouting that the U.S. economy is infinitely close to a "soft landing."

Combined with the exceptionally strong non-farm payroll data released in early October, which suggests that the U.S. job market continues to provide strong consumption momentum for consumers, along with recent financial reports from Wall Street giants showing that consumer spending patterns remain stable, it collectively paints a grand picture of the "consumption giant" continuing to drive the entire U.S. economy forward. This indicates that the U.S. economy is getting closer to a "soft landing" after experiencing a period of high inflation and the Federal Reserve's aggressive interest rate hikes.

However, while the persistently stronger-than-expected job market and consumption data significantly boost expectations for a "soft landing" in the U.S. economy, they also gradually cool expectations for interest rate cuts by the Federal Reserve. Some economists have stated that strong economic data may prompt the Federal Reserve to pause its interest rate cut process in November or December this year.

After the latest ADP employment data was released, interest rate futures traders generally continued to bet on a 25 basis point rate cut by the Federal Reserve in November. However, some traders have shifted to betting that the Federal Reserve will announce a pause in rate cuts in December, and even a smaller number of traders are betting on a pause in November. The CME "FedWatch Tool" shows that the interest rate futures market continues to bet on a 25 basis point rate cut in November, with a probability as high as 95%, but the probability of no rate cut in November has risen from 0 to 5%. An increasing number of traders are betting that the Federal Reserve will maintain the benchmark interest rate unchanged in December, with the CME "FedWatch Tool" indicating that the probability of no rate cut in December has jumped from 0 before the ADP data release to over 30%.

Top U.S. economist and finance professor at the Wharton School, Jeremy Siegel, recently stated that the Federal Reserve may keep interest rates unchanged at next week's meeting. Siegel noted that although almost all investors are convinced that the Federal Reserve will cut rates by another 25 basis points in November, if the non-farm payroll data released this Friday is exceptionally strong, it could overturn these expectations. "If the October job market report is strong, many people, many FOMC members will say, maybe we should pause rate cuts at this particular moment," Siegel said in a media interview