QI TAKEAWAY — ADP beat all but one forecast in the Bloomberg survey. This should keep the Fed on track for a November taper and a curve flattening in play. The curve ball is the GOP’s détente suggestion that the debt ceiling be resolved next month via reconciliation; the “gift” of the extra month diffuses Democrats claims that they don’t have adequate time to increase the debt ceiling along party lines by the ‘X’ date of October 18th.
- Since April 2020, roughly 40% of job gains have come from leisure & hospitality, per ADP, well above the 20% average from 2010-2019; meanwhile, non-leisure has underperformed in the post-pandemic environment, seeing just 60% of job gains vs. 80% in the decade prior
- ADP’s September payroll report saw a gain of 568,000, well above August’s initially reported 330,000; sectors underperforming headline growth included professional services and trade/transportation while manufacturing, education, and healthcare outperformed
- Since 2006, ADP Aggregate Hours Worked have had correlations of 0.9 and 0.88 to real GDP growth and real GDI growth, respectively; assuming the workweek is unchanged at 34.7 hours from August, ADP suggests a 4% QoQ annualized rate of expansion in Q3