The US economy added 42,000 private-sector jobs last month, more than expected
A sign is taped to the window of a business on October 3 in Miami. Due to the government shutdown
By Alicia Wallace, Lucy Bayly, CNN
(CNN) — Private-sector job creation bounced back in October, according to a snapshot of the labor market that has become more closely watched in the absence of official federal jobs data.
Payroll processing company ADP on Wednesday estimated that private-sector businesses added an estimated 42,000 jobs last month, a swing into positive territory after back-to-back months of job losses.
While October marked a return to job growth, ADP’s chief economist cautioned that the pace of hiring is running far below the pace seen during the past year.
“That recovery is tepid, and it is not broad-based,” Nela Richardson, ADP’s chief economist, said during a call with reporters on Wednesday.
ADP’s monthly tally has shown a significant slowdown in the job market since the summer, with net losses for September and August. Following revisions released Wednesday, there weren’t as many jobs shed in September as ADP initially estimated. September’s losses now sit at 29,000 jobs (versus a 32,000-job loss) and 3,000 positions were shed in August.
Still, a bounce-back was expected for October. Last week, ADP launched a weekly “pulse” report of employment estimates. That report showed that private employers added an average of 14,250 jobs per week during the four weeks that ended October 11.
Wednesday’s job gains came in stronger than the 37,500 jobs added that economists expected, according to FactSet.
The pulse report was launched to “meet the moment,” Richardson said, noting the federal government shutdown’s resulting black hole of employment and other data.
Shutdown ‘clouding’ the economic outlook
While ADP’s estimates have always functioned as a proxy for the official monthly jobs report from the Bureau of Labor Statistics – which is typically released two days afterwards – the two sets of numbers don’t always track.
However, with no jobs report last month nor expected this month due to the shutdown, ADP’s data has taken on an outsized role for economists and investors looking to gauge the health of the economy.
Federal Reserve Chair Jerome Powell said last week that the lack of government data is “clouding” the central bank’s view of economic activity and that a decision on a rate cut next month is not a “foregone conclusion.”
“If you’re driving in the fog, you slow down,” Powell said at a press conference following the October rate-setting committee meeting. “We’re going to have to do our jobs one way or the other. I hope by the time of the December meeting, we’re getting a better flow of data.”
The Fed implemented a quarter-point rate cut last week in order to shore up a softening labor market, but Fed Governor Lisa Cook this week said she sees more urgency for the central bank to focus on stubborn inflation rather than on unemployment.
The latest Consumer Price Index report showed annual inflation reached 3% last month, the highest level since January. The most recent jobs report the BLS produced showed unemployment crept up to 4.3% in August and the economy added just 22,000 jobs that month. And, for the first time in several years, there are not enough jobs for everyone seeking employment, with roughly 7.2 million open roles but around 7.4 million unemployed people.
This story is developing and will be updated.
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