The ADP reported weaker than expected job growth on Wednesday, signaling the US economy added 117,000 new jobs to the private sector. Economists had been expecting 177,000 new positions to have been added.
Throughout the Covid-19 pandemic, the theme for these job reports has remained consistent: Job growth is slow and the overall economy struggles to move along. Many of the new jobs are in the service industry, but numbers remain well below pre-pandemic levels. Until the country reaches herd immunity and can safely begin moving again, we are likely to see continued slow job growth in some large sectors.
As vaccinations ramp up, one area to watch will be unemployment in regions relaxing restrictions. Texas has now announced they will fully re-open the state and remove their mask mandate. Many other states will monitor what hiring implications this has as well as the potential health side effects faced as a result.
It is reasonable to expect a bump in employment figures in Texas as bars, restaurants, stores and sporting arenas can all increase capacity. It is also reasonable to expect a rise in Covid cases as fewer people wear masks and are in crowded spaces, the exact conditions society sought to avoid just 12 months ago.
Expectations for tomorrow’s report are an increase of 175,000 jobs and for the unemployment rate to remain at 6.3%. The participation rate remains lower than a healthy economy would like to see, but is expected given the nearly 10 million people still without work compared to pre-Covid figures.
A good employment report would go a long way with markets currently experiencing some volatility as a larger rotation into slower growth stocks and away from tech names is underway. These rotations are normal in large bull markets, but can cause periodic corrections as the high performers are sold off.
The markets look to be in rotation at the moment and are seeking a stabilizing force. Perhaps a stronger than expected employment outlook will calm the nerves of investors.
As with all economic announcements, it is imperative traders have a plan in place to protect themselves in the event of unexpected or surprising news. For exclusive market commentary, news announcements & more, bookmark the NinjaTrader Blog.