Private Employers Add 42,000 Jobs, Marking First Net Gain Since Summer

Figuring out what’s going on with jobs is hard work. 

New data on Wednesday from payroll processor ADP showed that private companies added 42,000 jobs in October, marking the first net gain since July. But is it a sign that pervasive economic fears (of an AI bubble, an equities pullback and a deteriorating jobs market) were simply symptoms of Spooky Season? Not quite, unfortunately.

‘A Welcome Surprise’

A Bloomberg survey of economists projected a job gain of 30,000, and the beat comes after ADP data showed a loss of 29,000 jobs in September. It’s why new Federal Reserve governor and rate-slashing advocate Stephen Miran called the data “a welcome surprise” in an interview with Yahoo News on Wednesday. Rest assured, Miran saw the good news as “an indication that rates could be a little bit lower than where they are now.”

That’s likely because the data provided plenty of evidence of continued macroeconomic headwinds:

• The job gains were offset by losses of 17,000 positions in information, 15,000 in professional and business services, and, perhaps more notably, 6,000 in leisure and hospitality, as well as 3,000 in manufacturing. ADP’s chief economist, Nela Richardson, called the drop in leisure “the most concerning trend” in the report and a sign of a struggling consumer base.
• In another sign of a stagnating labor market, year-over-year pay growth remained largely unchanged from September, with gains of 6.7% for job changers and 4.5% for job stayers, according to the report. That’s around the lowest the growth rates have been since the first half of 2021, according to Bill Adams, chief economist for Comerica Bank. Adams also said that overall employment was likely roughly flat in October due to layoffs in the federal government amid the longest shutdown in history.

Service Elevator: Meanwhile, data from the Institute for Supply Management, also released Wednesday, showed that services-sector activity returned to growth in October, while its index for prices in the sector climbed to the highest point since October 2022. Looks like Miran will face plenty of opposition when the Fed’s monetary policy committee reconvenes next month.