The ADP report for September shows private payrolls down 32,000 after a downward revision to down 3,000 in August. The September change in level is well below the consensus of up 50,000 in the Econoday survey of forecasters. The report includes annual benchmark revisions which encompass the BLS benchmark revisions issued on September 9. ADP chief economist Nel Richarson said, Despite the strong economic growth we saw in the second quarter, this month's release further validates what we've been seeing in the labor market, that U.S. employers have been cautious with hiring.

In September, goods-producers' payrolls are down 3,000. An increase of 4,000 in natural resources and mining was more than offset by declines of 5,000 in construction and 2,000 in manufacturing.

Service-providers' payrolls are down 28,000 in September. Declines of 19,000 in leisure and hospitality, 16,000 in other services, 13,000 in business and professional services, and 9,000 in financial activities were only partially offset by increases of 33,000 in education and health services, and 7,000 in trade, transportation, and utilities.

Payrolls at small businesses (1-49 employees) are down 40,000 and medium-sized businesses (50-499) lost 20,000 jobs, while large firms (500+) added 33,000 jobs.

The ADP pay insights reflect ongoing moderate gains compared to September 2024, but upward momentum is flagging. The September median change in pay for job-stayers is up 4.5 percent compared to a year ago and has been essentially the same pace since April. The median annual increase for job-changers is up 6.6 percent in September, down four-tenths from the pace in August and the lowest since up 6.6 percent in September 2024.

Private payrolls expected up 50K for September versus 54K in August, another muted showing.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.