Private payroll growth surprised to the upside in October as ADP reported a gain of 42,000 jobs, a rebound following a revised 29,000 decline in September and beating market expectations of a 25,000 increase.
The increase was not broad-based. All of the net job creation came from companies employing at least 250 workers, which collectively added 76,000 positions, while smaller firms lost 34,000 jobs, a trend that keeps small-business hiring, which historically supplies the bulk of employment, firmly in focus.
“While big companies make headlines, small companies drive hiring,” Dr Nela Richardson, Chief Economist at ADP, said on CNBC. “So to see that weakness at the small company level is still a concern, and I think that’s one of the reasons why the recovery has been so tepid.”
By industry, a gain of 47,000 jobs in trade, transportation and utilities helped offset losses elsewhere.
Education and health services added 26,000 roles, and financial activities contributed 11,000.
Meanwhile, information services shed 17,000 positions and professional and business services lost 15,000, with leisure, other services and manufacturing also posting declines.
“Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year. Meanwhile, pay growth has been largely flat for more than a year, indicating that shifts in supply and demand are balanced,” noted Richardson.
Wage growth remained solid for incumbents and stronger for job-switchers. ADP said year-on-year pay for those staying in their jobs rose 4.5%, unchanged from September, while those who switched jobs saw pay increases running higher.
The ADP release has assumed extra prominence because the Bureau of Labor Statistics has suspended data collection and its monthly nonfarm payrolls publication amid the federal government shutdown, leaving private indicators such as ADP’s report as the best timely read on labour conditions for now.
Looking ahead, economists and market participants will monitor alternative indicators while official BLS data remain on pause, including announced layoffs from Challenger, Gray & Christmas, state jobless claims and consumer sentiment measures such as the University of Michigan index, for further insight into hiring momentum.
