ADP Employment Rise Disappoints in October

The ADP National Employment Report indicated that nonfarm private sector payrolls increased 113,000 during October (2.1% y/y) after rising an unrevised 89,000 in September and an unrevised 180,000 in August. A 150,000 October gain was expected in the Action Economics Forecast Survey. Three-month average growth of 127,000 was the weakest since March 2021 and below the most recent high of 345,000 per month in July.

Employment at medium-sized firms (50-499,000 employees) rose 78,000 (3.4% y/y) in October after increasing 48,000 in September, well below a 180,000 June high. Small business hiring (1-49 employees) rose 19,000 during October (1.8% y/y) following an 82,000 September gain. These compare to gains well over 200,000 per month from May through July. Employment at firms with over 500,000 employees rose 18,000, roughly unchanged y/y. The increase followed a 44,000 September decline.

By industry group, goods-producing employment rose a negligible 6,000 (2.6% y/y) after a modest 5,000 September increase and a 17,000 August rise. Hiring in the manufacturing sector improved 3,000 (-1.4% y/y), following six declines in the prior seven months. The number of construction jobs rose 4,000 (5.1% y/y) after a 12,000 September gain. Natural resource & mining sector employment eased 1,000 (+21.3% y/y) following a 6,000 September gain.

Service-producing jobs rose 107,000 last month (2.0% y/y) following an 84,000 rise and remained well below July’s 269,000 increase. Holding back the overall gain, professional & business services employment declined 10,000 (-0.2% y/y) after falling 26,000 in September. To the upside, education & health services employment rose 45,000 last month (2.0% y/y) after improving 17,000 in September. Trade, transportation & utilities payrolls rose 35,000 (1.4% y/y) in October after declining 14,000 in the prior month. The number of leisure & hospitality jobs rose 17,000 (8.8% y/y) after an 85,000 September increase. Financial activities employment rose 21,000 (-1.4% y/y) after increasing 17,000 in September. Information sector employment held steady (-1.3% y/y) after a 1,000 September easing.

Growth in median annual pay for "job stayers" eased to 5.7% y/y in October from 5.9% y/y in September, 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 6.6% y/y pay gain in October compared to 16.9% y/y growth in March 2022. Education & health services pay rose a lessened 6.3% y/y, down from a 7.3% y/y high last October. Financial sector earnings rose 6.1% y/y, below a 7.8% y/y high in November of last year, while information sector pay rose a lessened 5.1% y/y and remained below the 8.0% y/y peak in June 2022. Factory sector earnings rose 5.2% y/y versus a high of 7.8% y/y in September 2022. Pay increases for “job changers” has decelerated sharply, averaging 8.4% y/y, below the 16.4% y/y peak in June 2022.

By Census region, the number of jobs in the South increased 64,000 last month (-0.9% y/y) after a 27,000 increase. Employment in the Northeast improved 21,000 (6.4% y/y) following a 34,000 September gain. Employment in the West increased 46,000 (2.2% y/y) in October following an 8,000 dip. Jobs in the Midwest weakened 13,000 (+3.0% y/y), the second decline in three months.

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.