According to payroll company ADP, employment in the private sector grew in September, demonstrating the resilience of the labor market despite indicators of weakness.
In September, businesses onboarded 143,000 new positions, surpassing the upwardly adjusted total of 103,000 jobs added in August and exceeding the expected 128,000 jobs predicted by economists at Dow Jones.
While job creation was strong, wage growth saw a slight decrease. The rate of wage increase for employees who remained in their positions dropped to 4.7%, while for those who switched jobs, it was at 6.6%, seeing a reduction of 0.7 points from the previous month.
Job growth was widespread, particularly notable in leisure and hospitality sectors, which accounted for 34,000 jobs. Other sectors that contributed included construction (26,000 jobs), education and health services (24,000 jobs), professional and business services (20,000 jobs), and other services (17,000 jobs).
The only sector to experience job losses was information services, which saw a decline of 10,000 positions.
Service-oriented businesses contributed 101,000 to the total job growth, with the remaining numbers from product-producing companies.
From a business size standpoint, all job growth came from larger companies with more than 50 employees. Conversely, small businesses faced challenges, with a decline of 13,000 jobs seen among firms employing fewer than 20 individuals.
ADP’s report, which precedes the Department of Labor’s non-farm payrolls data, anticipates an increase of 150,000 jobs. However, only 118,000 of those are attributed to the private sector, particularly after the prior month’s disappointing figure of 142,000 job additions.
It’s important to note that ADP’s statistics may diverge significantly from the official figures released later.
Federal Reserve officials are carefully evaluating employment data to guide their ongoing monetary policy decisions. In a recent address, Fed Chairman Jerome Powell referred to the labor market as “robust,” although he acknowledged its notable cooling over the past year.
With the recent half-point interest rate reduction in September, further cuts are anticipated in the upcoming months. The central question remains whether to continue with larger rate decreases or return to smaller, more traditional quarter-point adjustments.
Current futures market expectations indicate a quarter-point decrease in November and an additional half-point drop in December. Powell has indicated that the Federal Reserve is closely watching the employment data and is prepared to respond appropriately, though a sequential quarter-point decline seems more probable at this stage.
