Labor Market Shows Continued Signs of Cooling in Private Employers Report
NEW YORK (October 4) Private employers in the U.S. added far fewer jobs than expected in September as the labor market slows under the pressures of rising interest rates and inflation.
A report released Wednesday from payroll processing firm ADP showed a gain of 89,000 jobs for the month.
That compares to the 150,000 jobs economists expected, according to consensus estimates gathered by Dow Jones. It also compares to an upwardly revised 180,000 jobs added in August.
"We are seeing a steepening decline in jobs this month," said ADP Chief Economist Nela Richardson. "Additionally, we are seeing a steady decline in wages in the past 12 months."
The labor market had been unexpectedly resilient through a long series of interest rate hikes from the Federal Reserve aimed at slowing the economy to curb inflation. The Fed has raised rates 11 times since March 2022, and a softer labor market could mean the central bank can stop raising interest rates.
Another report this week showed continued strength in the labor market. The Labor Department's August Job Openings and Labor Turnover Survey reported 9.61 million job openings, well above an expected 8.8 million, according to consensus estimates from Dow Jones.
In the ADP report, the biggest job gains came in leisure and hospitality, 92,000; financial activities, 17,000; and construction, 16,000.
The professional and business services category lost 32,000 jobs; trade, transportation and utilities was down 13,000 jobs; and manufacturing was down 12,000 jobs.
ADP releases its numbers ahead of the Labor Department’s more closely watched nonfarm payrolls report, which is due out on Friday. Economists expect the government report to show a gain of 170,000 jobs in September following a 187,000 increase in August. The unemployment rate is expected to drop to 3.7% from 3.8% in the previous month.
The two reports use different methodologies and often vary widely. The ADP data is based on payrolls from 225,000 establishments and 14 million employees. The Labor Department surveys households and establishments.
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