| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Private Payrolls - M/M | 25,000 | -20,000 to 50,000 | 42,000 | -32,000 | -29,000 |
Highlights
The ADP national employment report for October shows private payrolls up 42,000 after a small upward revision to down 29,000 in September. The October increase is the first after two months of declines and above the consensus of up 25,000 in the Econoday survey of forecasters. However, payroll gains are not broad-based and reflect sectoral activity which may not be sustained. Moreover, small- and medium-sized businesses continued to cut payrolls while the bulk of hiring was at large firms.
Regional hiring in October was modest at up 9,000 in the Midwest and 6,000 in the South. An increase of 40,000 in points to stronger economic growth in the West. Private payrolls in the Northeast decline of 12,000 includes a drop of 20,000 in the mid-Atlantic that is probably due to the government shutdown.
Private payrolls for goods-producers in October are up 9,000 with natural resources and mining up 7,000, construction up 5,000, and manufacturing down 3,000. Private service-providers' payrolls are up 33,000. There are gains of 47,000 in trade, transportation, and utilities, 26,000 in education and health services, and 11,000 in financial activities. The first of these probably includes seasonal hiring in preparation for the winter holiday period. There are decreases of 17,000 in information, 15,000 in professional and business services, 13,000 in other services, and 6,000 in leisure and hospitality. The impact of swift adoption of AI is probably a factor for information and professional and business services.
Payrolls at small establishments (1-49 employees) is down 10,000 in October and medium-sized establishments (50-499 employees) is down 21,000. Some of this is a lack of labor supply specific to their operations and some is caution in adding to payrolls at a time of great economic uncertainty. Large businesses (500+ employees) add 73,000 jobs in October. Large businesses may have more resources to take advantage of increases in the supply of some types of skilled labor.
The ADP pay insights for October show an annual median change in pay of up 4.5 percent for those who remained at the current jobs. Those who changed jobs saw a median year-over-year increase of 6.7 percent. Both of these increases are the same as in September which suggests that pay gains are reaching a plateau.
Regional hiring in October was modest at up 9,000 in the Midwest and 6,000 in the South. An increase of 40,000 in points to stronger economic growth in the West. Private payrolls in the Northeast decline of 12,000 includes a drop of 20,000 in the mid-Atlantic that is probably due to the government shutdown.
Private payrolls for goods-producers in October are up 9,000 with natural resources and mining up 7,000, construction up 5,000, and manufacturing down 3,000. Private service-providers' payrolls are up 33,000. There are gains of 47,000 in trade, transportation, and utilities, 26,000 in education and health services, and 11,000 in financial activities. The first of these probably includes seasonal hiring in preparation for the winter holiday period. There are decreases of 17,000 in information, 15,000 in professional and business services, 13,000 in other services, and 6,000 in leisure and hospitality. The impact of swift adoption of AI is probably a factor for information and professional and business services.
Payrolls at small establishments (1-49 employees) is down 10,000 in October and medium-sized establishments (50-499 employees) is down 21,000. Some of this is a lack of labor supply specific to their operations and some is caution in adding to payrolls at a time of great economic uncertainty. Large businesses (500+ employees) add 73,000 jobs in October. Large businesses may have more resources to take advantage of increases in the supply of some types of skilled labor.
The ADP pay insights for October show an annual median change in pay of up 4.5 percent for those who remained at the current jobs. Those who changed jobs saw a median year-over-year increase of 6.7 percent. Both of these increases are the same as in September which suggests that pay gains are reaching a plateau.
Market Consensus Before Announcement
Private payrolls expected up a modest 25K after their decline of 32K in September.
Definition
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.
Description
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.
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.
