Private-sector payrolls in America rose by just 67K last month, according to new ADP data. That was the smallest increase since May and much worse than expected. The October print, though, was revised higher and the smoother 3-month average payrolls gain remained more than high enough to keep pace with U.S. population growth. As we have explained before, this particular ADP data series does a better job of confirming recent trends in the labor market than predicting what will be seen in the more important monthly nonfarm payrolls report from the government (due out this Friday).
To this end, today’s data showed that the pace of hiring has indeed cooled but still more in line with what we would expect in a tight labor market rather than an economy teetering on recession. Weakness has also been exacerbated by the ongoing trade war as well as transitory factors such as the GM autoworkers strike. Moreover, the composition of job gains and losses highlights how all of the declines lately have occurred in the goods-producing arena (see above), whereas employment at service-providing firms continues to hold up well (see below). Smaller firms have struggled the most in this environment because although hiring rose for the fifth month in a row at firms with 1-49 workers, the rate of growth has clearly slowed due to the additional challenges these businesses face when trying to compete with larger corporations for talent.
Sources: Econoday, ADP