By Trang Nguyen, THE TAKEAWAY: U.S. ADP employment change came in better than forecast > More job creations in service sector > U.S. dollar little changes. The monthly ADP National Employment report showed that U.S. companies hired 91 thousand workers more in September, marking eighteen consecutive months of job creation in private sector. The figure beats median forecast from Bloomberg survey as thirty nine economists called for the reading of 75 thousand, with projections ranged from declines of 10 thousand to advance of 117 thousand. August’s figure was revised downward to a gain of 89 thousand from 91 thousand. As the ADP employment change is considered a precursor to the non-farm payrolls number, a better-than-forecasted figure today raised hope that non-farm payrolls reading released this Friday might exceed expectations as well. U.S. Monthly ADP Employment Change: March 2010 to Present Prepared by Trang Nguyen In terms of size-based companies, gain in employment in small- and medium-sized businesses significantly contributed to the total 91 thousand jobs gain in private sector this month. Small firms added 60 thousand jobs while medium firms created a lesser amount of 36 thousand. In contrast, large firms slashed 5 thousand jobs. Regarding to sector, service providers generated the most with 90 thousand jobs. Meanwhile, good producers added meager 1 thousand jobs. On the other hand, manufacturers cut 5 thousand workers as durable goods orders contracted for the third straight month in a row in September. GBP/USD 1-minute Chart: October 5, 2011 Charts created using Strategy Trader – Prepared by Trang Nguyen Though the ADP employment change printed better than estimates, market participants showed fairly muted reactions minutes before and after the release. As can be seen from the 1-minute GBPUSD chart above, the currency pair has been trading in a narrow range from 1.5440 to 1.5460. The Relative Strength Indicator has lied in a range from 30 to 70, indicating neither overbought nor oversold reactions in currency market. It is obvious that 91 thousand more hiring in September are insufficient to reduce a very high unemployment rate, which maintained more than 9 percent for many months. In the testimony prepared for the Joint Economic Committee of Congress yesterday, Bernanke expressed “the likelihood of more sluggish job growth in the period ahead”. Investors are now closely watching Friday Government’s non-farm payrolls to have a better assessment about the current labor situation in the U.S. It is predicted that employers added 60 thousand new workers in September, following the unexpectedly zero job growth in August. Unless the labor market shows improvements, the U.S. economy would face “significant downside risks” as low consumer spending has discouraged economic growth. --- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com To contact Trang, email firstname.lastname@example.org
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