Private-sector payrolls in America rose by 230K in September, according to new data from ADP. That was significantly better than expected and the largest monthly gain since February. The August figure was also revised higher, which helped lift the less volatile 3-month average pace of job creation to 203K, well above the rate needed to keep up with U.S. population growth. Under the hood, most of the private-sector payrolls added in September were as usual found in the services sector (+184K), but the goods-producing sector also posted an above-trend 46K gain, helped by strong construction hiring. As for small business employment, payrolls at firms with 1-49 workers rose by 56K in September.
That was more than double August’s gain and enough to account for one in every four private-sector payrolls added to the economy last month. The improvement might be related to the growing number of small firms that are boosting wages and enhancing benefits offerings in an attempt to better compete for talent in the tight labor market. Altogether, this was a positive report, but it is important to note that this data series from ADP is not always the best predictor of the more important monthly job report from the Bureau of Labor Statistics (due out on Friday). Moreover, ADP’s data should instead be viewed as a confirmation of recent trends in the labor market, which overall remain encouraging. Mark Zandi, chief economist of Moody’s Analytics, added that “The job market continues to power forward. Employment gains are broad-based across industries and company sizes. At the current pace of job creation, unemployment will fall into the low 3%’s by this time next year.”
Sources: Econoday, ADP
Post author: Charles Couch