ADP(US:ADP) Hua Er Jie Jian Wen·2025-10-01 15:06Core Viewpoint - The unexpected decline in U.S. private sector employment in September signals economic cooling and increases the likelihood of two interest rate cuts by the Federal Reserve before the end of the year [1][3]. Employment Data Summary - In September, U.S. private sector employment decreased by 32,000, with the previous month's data revised to a decrease of 3,000, contrasting sharply with the market expectation of an increase of 51,000 [1][3]. - The decline in employment is partly attributed to ADP's annual data benchmark adjustment, which revealed that the original data from the Quarterly Census of Employment and Wages (QCEW) had "higher than normal levels of missing or revised values" [3][4]. - The recalibration led to a reduction of 43,000 jobs in September before adjustments [3]. Industry and Regional Breakdown - Employment changes by industry showed: - Goods-producing sector: decreased by 3,000 jobs - Service-providing sector: decreased by 28,000 jobs - Notable declines included: - Trade/transportation/utilities: -7,000 - Financial activities: -9,000 - Professional/business services: -13,000 - Leisure/hospitality: -19,000 - Education/health services saw an increase of 33,000 jobs [5][6]. - Regional employment changes indicated: - Northeast: +21,000 - Midwest: -63,000 - South: +3,000 - West: +15,000 [6]. Market Reaction - Following the weak employment report, traders increased bets on interest rate cuts, with the market closely aligning with the Fed's guidance on potential cuts before December [3][7]. - The report supports a dovish stance from the Federal Reserve, suggesting that a weak labor market may provide more policy space for rate cuts in response to economic slowdown [7][8].