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Private employers in the US added 42,000 jobs in October, according to unofficial data that investors are relying on due to the record government shutdown.
Wednesday’s figure from payroll processor ADP was more than the 30,000 increase that was forecast by economists polled by Bloomberg and compared with a loss of 29,000 jobs in September.
While the figures represented a turnaround from two months of declines in private payrolls, economists broadly remain focused on emerging signs of weakness in hiring across the world’s biggest economy.
“Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year,” said Nela Richardson, ADP’s chief economist.
Separately, a report on Wednesday from the Institute for Supply Management showed the vast US services sector expanded modestly last month. The ISM’s non-manufacturing purchasing managers’ index rose in October to its highest level since February.
The survey showed business activity and new orders grew in October, but employment continued to contract for the fifth consecutive month.
Wednesday’s figures come a week after the Federal Reserve cut interest rates but tempered expectations of a further reduction in December, as the federal government shutdown deprived officials of a clear picture of the economy.
Economists regard the ADP report as a volatile indicator. However, the longest shutdown on record has disrupted the release of official economic statistics and forced investors and policymakers to pay more attention to privately produced data.
The ADP report showed the largest driver of employment was a strong turnaround in trade, transportation and utilities, which gained a net 47,000 jobs in October, a sign that companies may be adjusting to President Donald Trump’s trade war.
Apollo chief economist Torsten Sløk said it was “not surprising” the labour market continued to hold up.
“‘Liberation day’ is getting further and further behind us,” he continued, referring to Trump’s move in early April to impose tariffs on trading partners. “The fog is lifting and we have more clarity on the trade front.”
While economists broadly do not expect a deep downturn in the labour market, there have been signs of growing lay-offs in recent weeks, which may take weeks or even months to appear in payroll data, Richardson said.
Companies including Amazon, Paramount, UPS and Target said the lay-offs reflected both an increasing embrace of artificial intelligence and a reversal of the rush to restaff following the pandemic. Others cited rising costs from Trump’s tariffs regime and falling sales.
The most concerning trend is the continued weakness in leisure and hospitality, Richardson said. “It leads directly back to the consumer . . . this negative number is something to watch as we head into the holiday season.”
The ADP report also showed that education and health services continue to be a major contributor to overall employment gains, with other sectors like financial services also adding roles. Industries including professional services shed jobs.
Large businesses — those with at least 500 employees — added 73,000 jobs in October, while medium and small companies shed roles. LH Meyer policy economist Derek Tang said the ability of bigger companies being “better able to navigate policy risk” than smaller ones meant the labour market consolidation trend would probably continue.
Relatively strong wage growth in October was an encouraging sign. The median annual pay for “job-stayers” rose 4.5 per cent but was up 6.7 per cent for “job-changers”.
The S&P 500 was up 0.7 per cent at midday, staging a partial recovery from Tuesday’s tech-led sell-off.
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