In October, there was an addition of 113,000 jobs in the private sector, falling short of the Dow Jones forecast of 130,000. Meanwhile, wage growth reached a low of 5.7%, the lowest in a year.
The number of jobs added was 113,000, which fell short of the forecasted 130,000.
Wage growth has reached a one-year low, standing at 5.7%.
The majority of the job contribution came from mid-sized firms, which added 78,000 jobs.
In October, private sector workforce expansion was moderate, coming in under market projections, as per ADP's latest data release. The payroll processing firm indicated a gain of 113,000 jobs, up from the 89,000 recorded in September but notably lower than the Dow Jones consensus forecast of 130,000. This trend might indicate a potential deceleration in the labor market.
Wage growth also fell short of expectations, with a year-over-year uptick of just 5.7%, the lowest since October 2021. A closer examination of sectors showed varied results. Education and health services topped the charts with 45,000 new positions, followed by trade, transportation, and utilities, adding 35,000 jobs. The financial activities and leisure and hospitality sectors also made contributions of 21,000 and 17,000 new jobs, respectively.
Notably, the majority of job growth came from firms with 50-499 employees, which collectively added 78,000 jobs. Most of these new positions were in service-providing industries, as goods producers made a marginal contribution of just 6,000 jobs. ADP's chief economist, Nela Richardson, highlighted a lack of dominance from any single industry in hiring this month, underlining the possible diminishing trend of substantial post-pandemic pay increases.
The ADP report sets the stage for the Labor Department’s upcoming nonfarm payrolls data, expected to show a gain of 170,000 jobs. It’s important to note that historical discrepancies have been observed between these government figures, which encompass public sector jobs, and ADP’s counts. For instance, in September, the Labor Department reported a substantial 336,000 job gains, more than tripling the ADP estimate.
Given the shortfall in job expectations and the deceleration in wage growth, the short-term outlook for the employment market appears cautiously bearish. Despite the slowdown, Richardson maintains that job growth rates are still enough to support strong consumer spending. Market participants should monitor the official government data closely for a more comprehensive view of the labor market.
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