October 2022 ADP Jobs Report
Private payroll growth remained strong in October, while workers’ wages also rose, particularly in the entertainment and hospitality industries, according to a report from payroll processing company ADP on Wednesday.
Companies added 239,000 positions for the month, ahead of the Dow Jones estimate of 195,000 and better than the downwardly revised 192,000 in September. Wages increased by 7.7% on an annual basis, which is 0.1 percentage point less compared to the previous month.
Job gains were particularly strong in the key leisure and hospitality sector, which added 210,000 jobs, while wage growth accelerated to 11.2%. The industry, which includes hotels, restaurants, bars and related businesses, is seen as crucial as it has taken the brunt of Covid and is still below pre-pandemic levels.
All of the job growth came from service-related industries, which added 247,000 jobs, while goods-producing sectors lost 8,000 jobs, mostly due to the loss of 20,000 manufacturing positions. Trade, transport and utilities grew by 84,000.
“This is a really strong number given the maturity of the economic recovery, but hiring has not been broad-based,” said ADP Chief Economist Nela Richardson. “Commodity producers, who are sensitive to interest rates, are pulling back and job-switchers are commanding smaller wage gains. While we’re seeing early signs of Fed-led demand destruction, it’s only affecting certain sectors of the labor market.”
The Federal Reserve is raising interest rates in an effort to cool inflation that is near its highest level in more than 40 years. One of the primary targets is the historically tight labor market, where job vacancies are outnumbered by nearly 2 to 1.
While the ADP number in the headline was strong, the details looked weaker.
Along with the decline in construction jobs, losses were also recorded in information (-17,000), professional and business services (-14,000) and financial activities (-10,000).
By business size, companies with between 50 and 249 employees had almost all the gains, adding 241,000.
The ADP report comes two days before the Bureau of Labor Statistics closely monitors nonfarm payrolls. That report is expected to show an increase of 205,000, from September’s 263,000.
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