Pre-Markets Up on Excellent Data from PCE and ADP

Wednesday, September 30th, 2026

Very favorable economic reports out this morning saw flattish pre-market trading indexes flip into the green within moments. We’ve ebbed a tad from the initial impact of Personal Consumption Expenditures (PCE) for August and private-sector payrolls from Automatic Data Processing ADP for September, but are +116 points on the Dow at this hour, +20 points on the S&P 500, +71 points on Nasdaq and +9 points on the small-cap Russell 2000.
 

PCE Inflation Much Healthier than Anticipated

First, the inflation news: Personal Income for August reached just +0.2%, half of the +0.4% reported for July. Consumer Spending last month came in slightly higher: +0.9% versus +0.8% expected, leaping above the +0.2% from the previous month. Generally speaking, we’d rather see spending not be more than 4x income, but the rest of today’s PCE numbers are very accommodative.

Headline PCE Price Index matched the +0.3% analysts had been expecting, up from a downwardly revised +0.1% for July. Year over year, +3.4% was 30 bps below projections, matching the -30 bps downward revision the prior month. This is big news: after May’s print of +4.1% PCE inflation threatened to bound higher into the second half of 2026, we’ve instead cooled off to our lowest levels since February.

Core PCE month over month was also cooler: +0.2% versus +0.3% expected, following a downwardly adjusted +0.1% for July. Year over year, another -30 bps drop from estimates — with another -30 bps downward revision the prior month — came down to +3.0%, again the lowest PCE inflation read we’ve seen since February. 

So then, seven months into the war with Iran that saw oil prices surge with the closure of the Strait or Hormuz, PCE inflation rates are suddenly back down to where they were then. Economists could scarcely have dreamed up a more favorable set of data points. And the Fed, which for years cited PCE numbers as its preferred rate of inflation, has just been given a pass from raising interest rates in October. This likely accounts for much of the pre-market moves higher.
 

ADP Private Sector Payrolls Better than Expected

This morning’s private-sector payrolls from ADP more than doubled expectations for September: +90K versus +68K consensus. This is the first up-month since May, which was also the last time this print reached tripled digits. It’s a healthy read, accounting for the month’s worth of retirees and then some. It also follows a downwardly revised +36K for August.

A relatively “normal” balance between Goods (+31K) and Services (+59K) was also a welcome bit of news. In terms of business size, small firms (fewer than 50 employees) brought in +33K new private-sector jobs, large corporations (greater than 500 employees) added +14K new hires, and medium-sized companies gained the lion’s share: +54K. 

In terms of industry, Education/Healthcare once again led the way with +55K new private-sector hires, followed by Leisure/Hospitality at +22K, Manufacturing with +17K and Construction +15K. This demonstrates nice distribution across the economic spectrum for the private-sector labor market. One notable exception is Financial Activities, which was -16K last month.

Those who remained at their current jobs, the Job Stayers, averaged +3.0% wage growth year over year for the month, while Job Changers averaged +4.8%, up 10 basis points (bps) from a month ago, but still on the lean side compared to when this metric was first introduced a few years ago. ADP Chief Economist Nela Richardson called it “a strong report” after “job creation rebounded and pay growth remained solid.”

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