The ADP Private Jobs report was weaker than expected

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Published Date 12/4/2024

Recent comments from Fed officials have leaned toward another 25 bp cut in the FF rate at the December 17th FOMC meeting with the usual catchall, data dependent. Powell this afternoon likely to be the same although his remarks are taken more seriously. With November employment report on Friday and after a total miss in October due to hurricanes and floods the November job data will get more than the usual interest. Powell will participate in a discussion at the New York Times DealBook Summit at 1:40 pm ET this afternoon.

November ADP private jobs were thought to be 165K, reported at 146K; a big revision lower for October, revised from 233K to 184K. The service-producing sector added 140K jobs, led by education/health services (50K); trade/transportation/utilities (28K); professional/business services (18K); leisure/hospitality (15K); financial activities (5K) and information (4K). The goods-producing sector added 6K jobs, of which 30K in construction and 2K in natural resources/mining while manufacturing shed 26K jobs. The overall growth for the month was healthy, industry performance was mixed. Manufacturing was the weakest we've seen since spring. Financial services and leisure and hospitality were also soft. Annual pay gains for job-stayers edged up for the first time in 25 months, to 4.8%. For job-changers, pay gains rose to 7.2%.

Weekly MBA mortgage applications last week increased 2.8% overall; purchases +5.6% while re-finances declined 0.6% from the prior week.

At 9:30 am the DJIA opened +206, NASDAQ +122, S&P +20. 10 year note 4.27% +4 bps. FNMA 6.0 30 year coupon at 9:30 am -5 bps from yesterday’s close and -18 bps from 9:30 am yesterday.

At 9:45 am the final November PMI composite service sector data, expected at 55.3, reported 54.9 and up from 54.1 in October.

At 10 am the November ISM services index, expected at 55.5, fell to 52.1 and down from 56.0 in October. The service sector slowing, the sector has been strong for months; still above 50 though that is the pivot between expansion and contraction.

Also at 10 am, October factory orders, expected +0.4% increased 0.2% but up from -0.2% in September.

The 10 year note has solid resistance at 4.20% and support at 4.33%. The 10 am data added some initial support, the 10 year note at 9:30 am 4.27%, at 10:05 am 4.24% on the weak ISM services report. Today should be quiet until Powell at 1:40 pm.

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J.C. Mier The Mortgage GOAT

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