The ADP employment report showed an increase of 192,000 in US employment in April, above the 180,000 expected. The service sector added 145,000 jobs, and the goods sector added 47,000 jobs. The leisure and hospitality sector saw the largest addition, with 56,000 jobs added. The report also showed sticky annual pay growth, particularly for job changers, up 9.3% Yoy which is down from 10.0% YoY in Mar but still up from 7.3% YoY in Feb.

The market is fading the ADP data which showed better-than-expected employment growth and sticky wage growth. Treasury yields are down early on FOMC day. S&P and Nasdaw futures bounced off of morning lows.

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The ECI grew 1.2% quarter-over-quarter (QoQ) and 4.2% year-over-year (YoY) in Q1 2024, exceeding expectations and matching the previous quarter's growth rate. Private wages and salaries increased 1.1% QoQ and 4.3% YoY, unchanged from the previous quarter. The growth in private wages was broad-based across occupations, with sales experiencing a notable 1.9% QoQ increase. Notably, wages and salaries of state and local governments grew 1.4% QoQ and 5.0% YoY, driven by healthcare services and public administration jobs.

The market responded to the ECI release with yields spiking, and small-cap stocks ($IWM) declining due to the continued pressure of high wages on businesses. The ECI beat was considered significant, especially given the FOMC meeting, and may have continue to put pressure on the Fed to remain hawkish.