Payroll processing company ADP reported Wednesday that private sector employment rose in September, suggesting the labor market is holding up despite some signs of weakness.
Companies added 143,000 jobs for the month, an acceleration from the upwardly revised reading of 103,000 jobs in August and better than the 128,000 jobs economists polled by Dow Jones had expected.
While employment increased, the rate of wage growth took another step down. The 12-month gains for those who stayed in their jobs fell to 4.7%, while they fell to 6.6% for job changers, down 0.7 percentage points from August.
Job gains were fairly broad, with the number of workers in leisure and hospitality at 34,000, followed by construction (26,000), educational and health services (24,000), professional and business services (20,000), and other services (17,000).
Information services was the only category to record a loss, down 10,000.
Service providers accounted for 101,000 of the total, while goods producers added the rest.
From a scale standpoint, all of the growth came from companies with more than 50 employees. Small businesses saw a loss, with the number of businesses employing fewer than 20 workers falling by 13,000.
The ADP report comes two days before the Labor Department's nonfarm payrolls report, which is expected to show growth of 150,000, after August's disappointing showing of 142,000, of which 118,000 came from private sector hiring.
While the ADP report is a precursor to the official census, the two can differ, sometimes by wide margins.
Federal Reserve officials are watching jobs numbers closely as they consider the next move for monetary policy and interest rates. In a speech on Monday, Federal Reserve Chairman Jerome Powell described the labor market as “strong” while noting that it had “clearly cooled” over the past year.
The Fed is expected to follow up with a half-percentage point rate cut in September with further cuts in November and December. The key question is whether the central bank will move with the same large increase or return to a more traditional quarter-point move.
Futures market prices are currently pointing to a quarter-point cut in November and then a half-point move in December. Powell noted that consecutive quarter-point moves are the most likely scenario now, although policymakers remain committed to the data and will adjust accordingly.
