Private sector hiring demonstrated an uptick in September, suggesting resilience in the labor market despite some signs of instability, according to a report released Wednesday by payroll processing firm ADP.
Companies increased payrolls by 143,000 jobs for the month, an improvement over the revised figure of 103,000 for August and surpassing the 128,000 consensus forecast from economists surveyed by Dow Jones.
Despite the rise in employment, the rate of wage growth experienced another decline. The annual pay increase for individuals who remained in their current jobs edged down to 4.7%, while for those who switched jobs, it fell to 6.6%, a 0.7 percentage point decrease from August.
Job gains were widely distributed among various sectors. Leisure and hospitality added 34,000 jobs, construction followed with 26,000, education and health services contributed 24,000, professional and business services gained 20,000, and other services accounted for 17,000 new positions.
Conversely, information services was the only sector to report a decline, shedding 10,000 jobs.
Service-related industries contributed 101,000 jobs to the total increase, while goods-producing sectors made up the remaining growth.
From an organizational size perspective, companies with over 50 employees were solely responsible for the job growth. Smaller firms, particularly those with fewer than 20 employees, experienced a reduction of 13,000 jobs.
The ADP employment figures precede the Labor Department’s nonfarm payroll report, which is anticipated to show an increase of 150,000 jobs in September, following a weaker performance in August with a rise of 142,000 jobs, 118,000 of which were from the private sector.
Although the ADP report provides an early indication of employment trends, it can differ substantially from the official government figures.
Federal Reserve officials are closely monitoring employment data as they deliberate upcoming decisions on monetary policy and interest rates. In a speech delivered on Monday, Fed Chair Jerome Powell described the labor market as “solid,” albeit “clearly cooled” over the past year.
The Federal Reserve is expected to follow its half percentage point interest rate cut in September with additional reductions in November and December. The primary consideration is whether the Fed will continue with large half-point cuts or revert to more conventional quarter-point adjustments.
Current futures market predictions suggest a quarter-point reduction in November followed by a half-point cut in December. However, Powell indicated that consecutive quarter-point reductions are more likely, emphasizing that policymakers remain responsive to incoming data and will adjust strategies as required.
