The first week of every month brings a new round of employment and payrolls data regarding the U.S. economy. While the biggest and most widely watched report is the Employment Situation report from the Bureau of Labor Statistics (BLS) each first Friday of the month, there is a preview of sorts that is used for a directional bias in the ADP private sector employment report that is issued ahead of the formal BLS report.

If ADP’s report holds consistent as a tool of bias rather than an outright prediction on the number of jobs added, then expectations for Friday’s BLS data will need to be ratcheted a tad higher. That is important, considering where Treasury yields have been and at a time when every headline and tweet about the China trade war adds pressure (or gains) to the stock market.

ADP’s August private sector employment data showed that payrolls increased by 195,000 jobs from July. The August ADP National Employment Report is derived from ADP’s actual payroll data and measures monthly changes in total nonfarm private employment on a seasonally adjusted basis. The Dow Jones consensus estimate was calling for a gain of just 140,000 payrolls in August. A rival consensus estimate from Econoday called for a gain of 150,000 in August.

Of the 195,000 payrolls that were added in August, small businesses (one to 49 employees) added 66,000 of those gains and mid-sized businesses (50 to 499 employees) added 77,000. That left the large business segment (500 employees and higher) with just 52,000 payrolls added in August.

Overall, the goods-producing sector (which includes manufacturing) added 11,000 jobs. The service-providing sector, which is what the United States has migrated more and more to over time, added 184,000 payrolls in August. These were broken down with gains as follows:

• Trade/transportation/utilities, +39,000
• Information, −6,000
• Financial activities, +5,000
• Professional/business services, +35,000
• Education/health services, +58,000
• Leisure/hospitality, +42,000
• Other services, +11,000

Two other preliminary reports were issued ahead of Friday’s formal BLS employment report.

The Challenger Job-Cut Report came out on Thursday. This showed that the number of announced layoffs in the economy rose to 53,480 in August from a level of 38,845 in July. While this is an increase, it remains quite muted compared to times of distress. That said, trade issues were cited for 10,000 of those cuts, and technology firms were also stronger in the layoffs, along with warehousing jobs.

The weekly jobless claims report from the BLS, which has not been high enough to matter in years, showed that the weekly initial jobless claims rose by a mere 1,000 to 217,000 in the week ending August 31. Dow Jones had 215,000 as its consensus estimate. The continuing claims, or the army of the longer-term unemployed (posted with a one-week lag), fell by 39,000 to 1.66 million.

As far as Friday’s Employment Situation report from the BLS, Dow Jones has a consensus estimate for the unemployment rate to remain flat at 3.7% and for total nonfarm payroll gains to be 150,000, versus 164,000 in the preliminary July data. Econoday as its consensus estimates the unemployment rate remaining flat at 3.7% with nonfarm payrolls falling to 160,000 from 164,000 in the prior month. Econoday also has a forecast for private sector payrolls to be flat at 148,000.

Using ADP for any direct forecast has not been successful over time, but using it for a bias has seemed to be the right call. That said, the bias likely has become more positive than it was earlier this week when market negativity was keying on every tick of the news regarding the trade war with China.

More proof in the pudding, particularly with China and the United States setting October trade-talk meetings, is that long-term bond yields went remarkably higher with equity futures. The yield on the 10-year Treasury rose 12 basis points to 1.580% and the yield on the 30-year Treasury rose almost 11 basis points to 2.065%.

The Dow Jones industrials were last seen up 429 points at 26,784, and the S&P 500 was up about 42 points at 2,979.65. The Nasdaq, loaded with chip and tech companies with stronger business in China, was up 144 points at 8,120.80 and was the strongest gain, 1.8%, out of the three major indexes.

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