According to two new reports, the U.S. labour market is showing improvement.

On Thursday morning, the U.S. Department of Labor released its Initial Claims Report. These claims are filed by people who lost their jobs in order to get unemployment benefits. (See Insiders’ Hot Stocks on TipRanks)

The initial jobless claims fell to 326,000 from 364,000. It means that there are more job opportunities.

Then there’s the September ADP Employment report published on Wednesday morning. That’s a monthly survey of the change in total U.S. nonfarm private jobs based on actual payroll data of ADP clients.

America’s private businesses hired 568,000 workers in September of 2021, up from a revised 340,000 in August, and ahead of market expectations of 428,000 hires. That’s the utmost improvement in private job gains in three months, led by gains in the service sector like hospitality and leisure (266,000), education/health services (66,000), and professional/business services (61,000).

“The labor market recovery continues to make progress despite a marked slowdown from the 748,000 job pace in the second quarter,” said Nela Richardson, chief economist of ADP. “Leisure and hospitality remain one of the biggest beneficiaries to the recovery, yet hiring is still heavily impacted by the trajectory of the pandemic, especially for small firms.

“Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months.”

Both the lower initial claims and strong ADP reports bode well to the Bureau of Labor Statists’ (BLS), September nonfarm payroll and unemployment report due out Friday.

The Federal Reserve closely monitors both reports as it attempts to assess the U.S.’s economy in relation to its mandate to ensure maximum employment. The market expects the U.S. nonfarm payrolls will rise to 500,000 from 235,000 as of August and that unemployment will remain at 5.1%.

If they confirm the improvement in the labor market, it will be a sign that labor supply is easing. It solves the puzzle of high unemployment that coexists with severe labor shortages.

That would be a mixed blessing for Wall Street, as it will speed the Fed’s tapering, the rolling back of its bond-buying program. That’s why traders and investors will watch closely how the nonfarm payroll and unemployment numbers will come out tomorrow.

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