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Better-Than-Expected Private Payrolls in October

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Better-than-expected monthly payrolls from the Automatic Data Processing (ADP - Free Report) survey came out this morning, with 571K new private-sector jobs in October having surpassed the analyst estimate of 398K by a ton. This follows a downwardly revised September, to 523K from an originally reported 568K. Friday’s nonfarm payroll survey from the U.S. government is currently expected to come in at 450K.

Goods and Services provided a pretty healthy balance — 113K and 458K, respectively — with the Leisure & Hospitality space once again bringing in the lion’s share of new private-sector hires, +185K. Professional & Business Services came next (which is a good read for white-collar employment) at +88K, followed by Trade/Transportation/Utilities at +78K. Education & Healthcare, long the industry leader in new monthly jobs prior to the pandemic, was +56K, with Construction (+54K) and Manufacturing (+53K) close behind.

For the second-straight month, large companies (more than 500 employees) brought in by far the most new jobs, according to the ADP report: 342K. Small businesses (fewer than 50 employees) and medium-sized firms were 115K and 114K, respectively. This connotes a level of aggressiveness among big firms to attract workers, perhaps with higher pay or with accommodations smaller firms don’t have, such as stock options and wider access to healthcare choices.

It’s a good month for jobs numbers — certainly better than what we were seeing in the doldrums period of mid-late summer during the spread of the Delta variant of Covid-19, where July and August averaged only around 330K new jobs per month. The highest mark in the cycle came back in May, 882K. Over the past 12 months, ADP has recorded private-sector jobs gains of 5.12 million. Not too shabby for any full-year period, historically.

It should also be good for the Fed to help make their mind up to announce a tapering program of asset purchases totaling $120 billion per month — $80 billion in Treasury bonds and $40 billion in mortgage-backed securities — later this afternoon. For some analysts, this has already been a long time coming; Fed Chair Powell had been adamant to leave the uber-accommodative conditions in place as 1) inflation tracks higher than 2%, and 2) employment levels begin to come back to where they were pre-Covid. With today’s ADP figure, the Fed decision is likely to be even more crystal clear.

A strong CDC recommendation for children aged 5-11 to receive the Covid vaccine from Pfizer (PFE - Free Report) /BioNTech (BNTX - Free Report) is helping shares of both drug developers this morning, and Dr Scott Gottlieb, ex-FDA commissioner and current vaccination expert said on CNBC’s “Squawk Box” this morning that we may see higher levels of adoption of the vaccine for American kids. This is expected to be because the lower dosage — 10 micrograms versus the 30-microgram dose given to adults — may put parents’ concerns about the safety of the vaccine to rest.

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