Private sector added 89K jobs in September as hiring and wage growth slow

Private sector employers added 89,000 jobs in September, payroll company ADP reported Wednesday, while annual pay grew 5.9% year over year, as both job growth and wage growth slackened.

The ADP National Employment Report found job losses at large companies, although small businesses added 95,000 jobs in September, including 67,000 jobs in businesses with between one and 19 employees, and 28,000 in businesses with between 20 and 49 employees. Midsized establishments added 72,000 jobs, including 55,000 in companies with between 50 and 249 employees, and 17,000 in companies with between 250 and 499 employees. Large companies with 500 employees or more, however, lost 83,000 jobs, offsetting many of the gains in small and midsized businesses.

The service-providing sector added 81,000 jobs in September, although the professional and business services sector, which includes accounting and tax preparation, lost 32,000 jobs. Most of the gains in the service sector came from the leisure and hospitality industry, which added 92,000 jobs. The goods-producing sector added 8,000 jobs, including 16,000 in construction and 4,000 in natural resources and mining, offset by a loss of 12,000 jobs in manufacturing. 

“The data shows the weakness in large-firm hires,” said ADP chief economist Nela Richardson during a conference call Wednesday with reporters. “Large firms have pulled back in 2023 after hiring so strongly in 2022. That pullback in hiring continues to persist. Pay growth has changed dramatically in 2023 versus 2022. In 2022 we were seeing the peak in a lot of data.”

People who stayed at their jobs saw a 5.9% year-over-year pay increase in September, but that marked the 12th consecutive month of slowing growth. For the professional and business services sector, the figure was 5.8%. Pay gains also shrank for job changers to 9% in September, down from 9.7% in August.

Richardson noted that the professional and business services sector is wide ranging, and a big part of it is support staff and office workers.

“We know that in a hybrid work arrangement that support staff is not as necessary as it was before the pandemic,” she added. However, she cautioned that it’s unclear whether the data for one month is enough to reflect a permanent shift in the labor market.