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November 13th - According to sources, the European Union is preparing to submit a plan to the United States to implement the next phase of the trade agreement reached between the two sides this summer. This move is reportedly a response to a proposal submitted by the US to the EU earlier this year. The US requested the EU to provide a legally binding plan to amend regulations that the US considers to harm the interests of US companies. Sources revealed that this "implementation action plan," which has not yet been submitted to the US, will focus on five key areas, including tariffs and market access. The plan proposes to establish a dialogue mechanism to address issues such as standards, digital trade, and technical barriers, and to explore cooperation in the steel and aluminum sectors. Currently, EU steel and aluminum products and many derivatives still face a 50% US import tariff. In addition, the plan will propose the establishment of an economic security working group, focusing on investment reviews, export controls, government procurement, and the supply of key raw materials, and will also cover and monitor the strategic procurement and investment projects committed by the EU in the agreement.According to sources familiar with the matter, the EU is preparing to present a plan to the US to implement the next phase of the trade agreement reached between the two countries this summer. The EU trade commissioner will meet with the US trade commissioner later this month.November 13th - Switzerlands chief trade negotiator is traveling to Washington to finalize a trade agreement with the United States, aiming to reduce the current 39% tariffs on Swiss goods. A spokesperson for the Swiss Ministry of Economic Affairs stated that Economy Minister Guy Parmelin and State Secretary Helene Budliger Artieda will travel to Washington for further consultations. The White House has not yet commented. Sources indicated earlier this week that Switzerland hopes to finalize an agreement to reduce US tariffs on its exports to 15%. Earlier this week, Trump confirmed that his administration is "working to reach an agreement to slightly reduce tariffs." When asked if the target was 15%, Trump responded, "I havent said a specific number, but well take some steps to help Switzerland."Standard Chartered Bank: Gold prices face upside risks in the first quarter of 2026.Standard Chartered Bank: Continues to expect the average gold price in the fourth quarter to be $4,000 per ounce.

ADP prospects in the United States: Although it has differentiated from non-agricultural, the popularity of "small non-agricultural" still cannot be underestimated

Oct 26, 2021 11:04

The market currently predicts that ADP's private sector employment will increase by 430,000 in September. The number of ADP employed in July and August was about half of what was expected. The September non-agricultural employment data is the key to the Fed's reduction of debt purchases.



ADP data and non-agricultural data are differentiated


Recently, the monthly correlation between the number of private employment from the Automatic Data Processing Corporation (ADP) and the national data of the Ministry of Labor is weak. However, these data came in a timely manner, released two days earlier than the government data, and they are the largest data in the country outside the non-farm employment report. Currently, analysts expect ADP's US companies to add 430,000 employees in September.

In the past six months, ADP data has failed to provide an early warning of fluctuations in non-agricultural data. In April, the market expected the non-agricultural employment population to increase to 978,000 from 785,000 in March. However, the actual number of non-agricultural employment was beyond market expectations, and only 269,000 new jobs were provided. The ADP employment change report rose from 519,000 to 662,000 that month.


(U.S. ADP employment population historical data)

In July, the non-agricultural employment population increased from 962,000 in June to 1.053 million, the best total since August 2020. In contrast, ADP's July data dropped from 741,000 to 326,000. Finally, the number of non-agricultural employment in the United States fell by 818,000 last month to 235,000. The August ADP data rose slightly from above 326,000 to 374,000.


(History of non-agricultural employment population in the United States)


From another perspective, in the five changes in the past six months, the non-agricultural employment population and ADP moved in the same direction only once, and that was in May. In the long period before this, the trend correlation between non-agricultural employment population and ADP is quite good. Both reports fell sharply in April 2020, followed by a large number of re-hiring in the following three months, and both reported negative values in December last year.

The trend of the U.S. labor market is hard to discern


For months, the US labor market has been publishing some confusing data. The number of jobs offered in August reached a record close to 11 million, while only 235,000 were recruited that month.


(Job vacancy at JOLT's in the US)

The situation of the initial application for unemployment benefits also forms another contrast. Despite the huge number of job vacancies, weak recruitment in August, and non-agricultural employment data in September are expected to be flat, the number of people applying for unemployment benefits for the first time has increased for three consecutive weeks. The number of applicants for unemployment benefits has increased from the lowest level of 312,000 in the week of September 3 to 32,000.

Another strange phenomenon is the unemployment rate. Ignoring the changes in recruitment this year, the rate is declining every month, from 6.3% in January to 5.2% in August.


(U.S. unemployment rate)

Officials and analysts believe that one of the reasons workers are clearly reluctant to return to work is that the Biden administration has extended the period of federal unemployment benefits. These supplementary subsidies expire in early September, so a large number of people are expected to return to work. However, the market does not seem to have strong confidence in employment recovery, and the non-agricultural employment population in September is expected to be only 45,000.

Some analysts also believe that the epidemic and its countermeasures have created a new economic situation, so that standard statistics, indicators, and analysis at best can only reflect part of what is happening in the labor market.

What is the outlook for the Fed's cuts?


The market is waiting for the Fed to confirm its plan to reduce the scale of bond purchases. The information that is good for a quick cut will support U.S. Treasury bond interest rates and the U.S. dollar. The dynamics of the labor market may have changed, but market transactions are based on traditional information and its impact on policy. Strong non-agricultural employment data will make it easier to explain and prove the reduction in debt purchase plans.

The ADP report may not be a reliable indicator of American employment, but as the most valuable data before non-agricultural, investors still inevitably pay attention to it. The changes in this data may still have a certain impact on the market.

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