A sign is taped to a business window in Miami on October 3. Because of the government shutdown, the Bureau of Labor Statistics is not releasing any official federal employment data. Joe Raedle/Getty Images
As mentioned by CNN
In October, the U.S. private sector again posted job growth, according to the latest snapshot of the labor market, which is being closely watched due to the lack of official federal employment data. According to ADP, private employers added about 42,000 jobs last month, signaling a rebound after a long period of slowdown.
While the month brought a notable rebound, the ADP chief economist warned that the hiring pace remains slower than at the start of the year and is concentrated in select sectors.
“This recovery is slow, and it is not comprehensive”
Where employment rose and fell
The largest gains in employment were recorded in the trade, transportation, and utilities sectors (+47,000 jobs); education and health services (+26,000); financial activities (+11,000).
The largest losses were recorded in information technology (-17,000), professional and business services (-15,000), and leisure and hospitality (-6,000).
“The most worrying trend is the drop in leisure and hospitality, as it quickly reflects consumer conditions and helps determine how healthy and sustainable demand will be,” Richardson said.
She also noted that weak hiring demand among small businesses could be another troubling signal for the state of the economy, given the larger share of employment in small firms.
The monthly ADP tally points to a significant slowdown in the labor market since the summer, with net losses in September and August. After revisions released on Wednesday, September was revised down by 29,000 jobs (previous estimate – 32,000), and August by 3,000.
Nevertheless, a rebound was expected in October. Last week, ADP launched a weekly payroll-pulse report. For the four weeks ended October 11, private employers added an average of 14,250 jobs per week.
Growth on Wednesday turned out to be stronger than economists expected: FactSet’s estimates had projected 37,500 new jobs.
The payroll-pulse report was launched to “answer the moment,” explained Richardson, using the data in the context of government shutdowns and related data.
Although ADP estimates typically serve as an indicator of the official monthly employment report from the U.S. Bureau of Labor Statistics, which is usually released a few days later, these two data series do not always align.
Given the lack of data for the prior month and the government shutdown, the ADP data have taken on heightened importance for economists and investors seeking to gauge the state of the economy.
Federal Reserve Chair Jerome Powell last week noted that the lack of government data “slows” the assessment of economic activity, and a decision to cut rates next month is not a “foregone conclusion.”
“If you’re driving in fog, you slow down”
The Fed also cut its policy rate by a quarter of a percentage point last week to support easing in the labor market, though Fed Governor Lisa Cook stressed that headline inflation requires more attention than unemployment.
The latest CPI report showed that annual inflation last month reached 3%, the highest in several months. The latest BLS report for August shows limited employment growth – the economy added only 22,000 jobs, while unemployment rose to 4.3%. For the first time in several years, the number of open jobs exceeded the number of unemployed – about 7.2 million openings versus roughly 7.4 million unemployed.
Taken together, these data point to a mixed dynamic in the labor market: demand for labor remains spread across sectors, and the official figures are still awaiting confirmation. Economists expect continued monitoring of the magnitude of gains and the persistence of inflation pressures to assess the trajectory of monetary policy and potential adjustments.
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