Forex News : ADP Employment Shows 43,000 Jobs Were Added, While Attention Now Turns to ISM, and FOMC

Forex News : ADP Employment Shows 43,000 Jobs Were Added, While Attention Now Turns to ISM, and FOMC
U.S. markets are ahead of a very important day, where important fundamentals are scheduled to be released in addition to the highly anticipated FOMC rate decision, which will determine whether the Fed will undertake QE2, not to forget the victory of the Republican party over Democrats in taking the majority in the House of Representatives.
The start today was with the labor market, where the ADP employment report was released for the month of October, as the ADP employment report showed that U.S. private employers added 43,000 jobs, compared with the prior revised drop of 2,000 jobs back in September, and better than markets estimates of 20,000 added jobs.
The importance of the ADP employment report comes from the fact that it is released two days ahead of the infamous jobs report, and investors will be scrutinizing the report in order to find any clues that will help them anticipate Friday’s non-farm payrolls, which is expected to rise by 60,000 jobs.
The labor market is showing slight signs of improvement; nevertheless, conditions in the labor market remain weak, since employers are still reluctant to add new workers amid the weak overall economic conditions, noting that unemployment continues to hover near its highest levels in more than 25 years standing at 9.6%.
The labor market has been the major obstacle standing in the way of economic recovery, where unemployment hammered income growth, and accordingly, consumer spending which is considered the cornerstone for economic growth in the United States since it accounts for nearly two thirds of economic activities remained weak, meaning that economic growth remained sluggish.
The U.S. government though tried to provide support for the labor market, nonetheless, that proved to be rather insignificant, as employers were still not hiring new workers over a strong pace, where employers still believe that the outlook of the economy is rather fragile, while demand levels remain at depressed levels.
The economy though is showing some encouraging signs recently that conditions will improve over a noticeable pace during next year, which will probably mark the real recovery for the U.S. economy, although we still expect the economy to underperform its long term growth potentials at least during the first half of 2011, however, the second half of 2011 should mark a real and aggressive improvement.
Markets will now turn their attention on the ISM services index which will be released later today, and is expected to show that activity in the services sector continued to improve, however, markets will be more focused on the FOMC rate decision, where investors are almost certain that the Fed will undertake a second round of Quantitative Easing (QE2), as the Fed is expected to conduct purchases of Treasury securities of $500 billion, which will be conducted on monthly basis with a total amount of $100 billion a month