Jobs: Crypto Rises, Equities Fall on Disappointing Numbers
Wednesday’s ADP data missed the mark, but Tesla and bitcoin rallied amid widespread market volatility.
- Employers added 330,000 jobs in July, missing the mark for the expected 653,000
- Markets fell but bitcoin rose on the news, showing that investors likely do not anticipate any major changes from the Fed
Jobs added at private companies in July came in far below expectations Wednesday, according to data from payroll management firm ADP.
Employers added 330,000 jobs in July, a far cry from the Dow Jones estimate of 653,000. Jobs growth showed the smallest increase since February.
“The labor market recovery continues to exhibit uneven progress, but progress nonetheless,” said Nela Richardson, chief economist at ADP, in the report. “July payroll data reports a marked slowdown from the second quarter pace in jobs growth.”
The largest area of growth, APD reported, came in the leisure and hospitality sector, although some worry the Delta variant may slow reopening efforts.
“For the fifth straight month the leisure and hospitality sector is the fastest growing industry, though gains have softened,” said Richardson. “The slowdown in the recovery has also impacted companies of all sizes.”
The disappointing numbers led to a hectic trading session early Wednesday. The 10-year Treasury yield crashed to its lowest level since February before erasing losses later in the day. Markets fell following the release of the report and all major indexes opened lower.
Bitcoin rose on the news, increasing from $37,896 to over $39,000 Wednesday. Tesla Inc. also saw a bump following the report and rallied as much as 0.98%.
While the ADP report disappointed, analysts say there is more important data coming this week.
“It’s one report that missed the mark and it’s a report that hasn’t done a great job of predicting private non-farm payrolls, which we will get on Friday,” said Tom Porcelli, RBC Capital Markets Chief US Economist on a podcast Wednesday.
Friday’s US Jobs Report will reveal the total number of paid workers in America, excluding farm employees, government employees, private household employees and employees of nonprofit organizations. Investors are hoping it will provide some insight into how the Federal Reserve will react in September.
Even as employers report fewer added positions, the labor shortage rages on. There are currently 9.2 million job openings, an all-time high.
“We have a staggering amount of job openings, sort of roughly equal to the amount unemployed and we cannot find those matches,” said Porcelli.
States have begun to cut back on Covid-era unemployment benefits, yet there does not seem to be increased interest in finding employment, according to Google Trends data. US search volume for “job near me” shows no increase in recent weeks, according to data.
Weekly jobless claims will be released Thursday ahead of Friday’s report. The Fed has indicated that “substantial further progress” must be made on the labor front before tapering begins.