Private employers added 90,000 jobs in September, beating forecasts, while the government's final Q2 GDP reading was revised up to 2.2% and core inflation came in cooler than expected. The S&P 500 climbed alongside the Dow and Nasdaq 100 as traders weighed the stronger growth data against Friday's official payrolls report.
Private payrolls beat forecasts
The S&P 500 gained ground on Wednesday after a batch of economic data pointed to a resilient labor market and firmer growth. Private-sector employers added 90,000 jobs in September, according to ADP, up from a downwardly revised 36,000 in August and above the Wall Street estimate of 68,000. Service providers added 59,000 positions while goods producers contributed 31,000, and education and health services led the gains with 55,000 new hires.
According to CNBC, ADP chief economist Nela Richardson said: "After a three-month slowdown, job creation rebounded and pay growth remained solid." Base pay rose 3.2% from a year earlier, while gross pay accelerated 4.7%. Financial activities and professional and business services were the weak spots, shedding 16,000 and 11,000 jobs respectively.
Inflation gauge cools
Traders also got a read on inflation Wednesday morning. Core PCE, the Federal Reserve's preferred inflation gauge, rose 0.2% month-on-month in August, cooler than the 0.3% expected and up from 0.1% in July. On a yearly basis, core PCE held at 3%, matching July's pace and still coming in below forecasts. The broader PCE index, which includes food and energy, rose 0.3% month-on-month and 3.4% year-on-year.
Q2 growth revised sharply higher
The growth picture strengthened further with the final estimate of second-quarter GDP. Real GDP grew at a 2.2% annualized pace, well above the 1.5% expected and the previous estimate, a 0.7 percentage-point upward revision that the Bureau of Economic Analysis attributed to stronger investment, consumer spending and government spending. Real final sales to private domestic purchasers rose 4.6%, up from 4.2% previously estimated, pointing to firmer underlying private demand than the headline figure alone suggests.
The S&P 500 rose 25 points shortly after the data was released, while the Dow gained 124 points and the Nasdaq 100 added about 67 points. Treasury yields fell across the curve, with the 2-year down 3.74 basis points and the 10-year down 2.08 basis points.
The Bureau of Labor Statistics' nonfarm payrolls report is due Friday, with consensus for a gain of 84,000 jobs and the unemployment rate holding at 4.1%.
Sources: CNBC, Investing.com, Investinglive
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