Private sector employment in the US rose by 37,000 in May and annual pay was up 4.5% year-over-year, the Automatic Data Processing (ADP) reported on Wednesday. This reading followed the 60,000 (revised from 62,000) increase recorded in April and missed the market expectation of 115,000 by a wide margin.
Assessing the report’s findings, “after a strong start to the year, hiring is losing momentum,” said Dr. Nela Richardson, chief economist, ADP. “Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers.”
Market reaction to ADP employment data
The US Dollar (USD) came under bearish pressure with the immediate reaction to the disappointing private sector employment data. At the time of press, the USD Index was down 0.25% on the day at 99.00.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.31% | -0.10% | -0.14% | -0.16% | -0.47% | -0.41% | -0.35% | |
| EUR | 0.31% | 0.20% | 0.13% | 0.14% | -0.15% | -0.11% | -0.05% | |
| GBP | 0.10% | -0.20% | -0.08% | -0.07% | -0.35% | -0.31% | -0.25% | |
| JPY | 0.14% | -0.13% | 0.08% | -0.00% | -0.37% | -0.21% | -0.18% | |
| CAD | 0.16% | -0.14% | 0.07% | 0.00% | -0.31% | -0.26% | -0.19% | |
| AUD | 0.47% | 0.15% | 0.35% | 0.37% | 0.31% | 0.04% | 0.14% | |
| NZD | 0.41% | 0.11% | 0.31% | 0.21% | 0.26% | -0.04% | 0.06% | |
| CHF | 0.35% | 0.05% | 0.25% | 0.18% | 0.19% | -0.14% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
