In a recent ADP report released on Wednesday, private sector payroll growth in October displayed a modest uptick but failed to meet market expectations, raising concerns about the state of the labor market. The data suggests that the employment landscape might be heading for darker times.
ADP, a prominent payrolls processing firm, revealed that companies added 113,000 workers to their payrolls during the month. While this figure marked an improvement from the unrevised 89,000 additions in September, it fell short of the Dow Jones consensus estimate of 130,000, reflecting a disconnect between the anticipated and actual job market performance.
Increase in Pay:
On the wage front, ADP reported a 5.7% increase in pay compared to the previous year, representing the smallest annual gain since October 2021. The report broke down the job gains by sector, highlighting education and health services as the leading contributor with 45,000 new jobs. Other notable gainers included trade, transportation, and utilities (35,000), financial activities (21,000), and leisure and hospitality (17,000). Notably, the bulk of these job gains emerged from the services-providing industries, with goods producers contributing just 6,000 jobs to the overall total.
Among the various business sizes, firms employing between 50 and 499 workers made the most significant contribution, adding 78,000 jobs. Nela Richardson, ADP’s chief economist, noted that “no single industry dominated hiring this month, and big post-pandemic pay increases seem to be behind us.” Despite the modest gains, Richardson emphasized that October’s numbers portrayed a comprehensive jobs landscape and that the labor market, though slowing, continued to support robust consumer spending.
Private sector payrolls rose 113,000 in October, less than expected, ADP report
Labour Department Announces Job Increase
ADP’s report arrives two days prior to the official release of the Labor Department’s nonfarm payrolls report, which includes government jobs. Market expectations for the Labor Department’s report suggest an increase of 170,000 jobs, potentially differing substantially from ADP report figures. This divergence was evident in the September data when the Labor Department reported a gain of 336,000 jobs, more than three times the ADP report estimate.
On the same day, the Labor Department also released its Job Openings and Labor Turnover Survey, which indicated little change for September. Job openings for the month totaled 9.55 million, slightly above the downwardly revised figure for August. Market analysts had anticipated 9.5 million job openings, resulting in an openings-to-available-workers ratio of 1.5 to 1, remaining consistent with August figures. Levels for quits and hires remained relatively stable, while the layoffs rate showed a slight decrease.
