After scary manufacturing drop, this is the number to watch Wednesday

That August number was not a good barometer for the much lower government report of just 96,000 private payrolls in August, but it will be watched nonetheless. Total payrolls were 130,000 in August, including government workers.

The ADP data is released at 8:15 a.m. ET Wednesday. The report comes right after a surprise drop in manufacturing activity that raised concerns of a manufacturing recession that could spread to the broader economy. The ISM manufacturing survey for August declined to 47.8, its weakest reading since June, 2009. Stocks sold off sharply after the report Tuesday morning, and investors jumped into the safety of bonds.

"The jobs report is pretty much front and center in telling us where the economy is. Are we close to the cliff or not, as the ISM manufacturers seem to believe," said Chris Rupkey, chief financial economist at MUFG. "The traditional rule of thumb for a recession...is two to three months consecutive declines in payroll jobs indicates a recession. We're not there yet. We'll see what happens.'"Fed funds futures also moved sharply after the ADP report.

"We have the employment number on Friday and I think, when you look at this number in isolation, you're seeing what you're seeing: a 60% probability of a 25-basis point cut in October. That was closer to 40% before the manufacturing number. If we get a weak employment number on Friday, I think you're going to see that probability for this month go up closer to 100%," said Greg Faranello, head of U.S. rates at AmeriVet Securities.

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