ADP Employment Increase Disappoints in September

Nonfarm private sector payrolls increased 89,000 last month (2.2% y/y) after rising 180,000 in August, revised from 177,000. Employment increased an unrevised 312,000 in July. A 158,000 September increase was expected in the Action Economics Forecast Survey. The gain lowered three-month growth to 193,700 per month from 315,700 as of August.

Employment at firms with over 500 employees declined 83,000 (+0.4% y/y) in September after increasing 79,000 in August. It was the fourth decline in five months. Small businesses hiring (1-49 employees) rose 95,000 during September (1.8% y/y) following a 28,000 gain. These increases compare to gains well over 200,000 per month from May through July. Employment at firms with 50-499 employees rose 72,000 (3.5% y/y) following an 81,000 August rise. These increases were well below the monthly increases which averaged 146,000 in the prior four months.

By industry group, goods-producing employment rose a negligible 8,000 (2.7% y/y) after a 17,000 August increase and a 43,000 July rise. Hiring in the manufacturing sector fell 12,000 (-1.2% y/y), the sixth decline in seven months. The number of construction jobs rose 16,000 (5.0% y/y) after a 7,000 August improvement. Natural resource & mining sector employment edged 4,000 higher (21.3% y/y) following a 1,000 August gain.

Service-producing jobs rose 81,000 last month (2.1% y/y), half the August increase and well below the 247,000 averaged in the previous four months. Holding back the overall increase, professional & business services employment declined 32,000 (-0.2% y/y) following a 19,000 August rise. Trade, transportation & utilities payrolls fell 13,000 (+1.1% y/y) in September after increasing 43,000 in the prior month. To the upside, the number of leisure & hospitality jobs rose 92,000 (9.2% y/y) after a 29,000 August increase. These compare to triple-digit gains in the each of the prior four months. Education & health services employment rose 10,000 last month (1.9% y/y) after improving 49,000 in August. Financial activities employment rose 17,000 (-0.6% y/y) after increasing 6,000 in August. Information sector employment edged 1,000 higher (-1.0% y/y) after a 10,000 August gain.

Growth in median annual pay for "job stayers" slipped to 5.9% y/y in September from 6.0% y/y in August and remained below a September 2022 high of 7.8% y/y. The earnings slowdown continued to be led by the leisure & hospitality sector, where a 6.7% y/y pay gain compared to 16.9% y/y growth in March 2022. Education & health services pay rose a lessened 6.4% y/y, down from a 7.3% y/y high last October. Financial sector earnings rose 6.2% y/y, below a 7.8% y/y high in November while information sector pay rose 5.5% y/y, below the 8.0% y/y peak in June 2022. Factory sector earnings rose 5.4% y/y versus a high of 7.8% y/y in September 2022. Pay increases for “job changers” has decelerated sharply, averaging 9.0% y/y, below the 16.4% y/y peak in June 2022.

By Census region, employment in the Northeast improved 34,000 (6.2% y/y) following a diminished 11,000 August gain. Employment in the West increased 66,000 (2.8% y/y) in September following a 29,000 increase. Jobs in the Midwest edged 2,000 higher (2.9% y/y) after falling 40,000 in August. To the downside, the number of jobs in the South fell 16,000 (-1.0% y/y) after a 29,000 increase.

The ADP National Employment Report and Pay Insights data can be found in Haver's USECON database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's AS1REPNA database.