US private sector employers added 568,000 jobs in September, ADP said Wednesday.
That was considerably more than the market expected. Consensus was looking for 430,000 (figure below). The range, from nearly three-dozen economists, was 250,000 to 610,000.
ADP hasn’t been a reliable predictor of NFP in the pandemic era, to put it politely. But the reasonably upbeat headline print was welcome nevertheless.
Gains were overwhelmingly concentrated in large firms. Businesses with 500 or more employees contributed 390,000 of the total jobs gain.
Mercifully, services sector hiring was robust. The 466,000 add for September came on the heels of a lackluster (in the current context) 297,000 in August, a month during which the government’s report showed leisure and hospitality hiring flatlined.
ADP’s data showed leisure and hospitality employment increased 226,000 last month, the most since June. Still, we’re nowhere near pre-pandemic levels (figure below).
Employers added 54,000 trade and transportation jobs, 66,000 education and healthcare positions and nearly 100,000 jobs across information, finance and professional & business services.
In the goods-producing sector, nearly 50,000 positions were added in both construction and manufacturing.
“The labor market recovery continues to make progress despite a marked slowdown from the 748,000 job pace in the second quarter,” Nela Richardson, ADP’s chief economist, remarked, adding that although leisure and hospitality “remains one of the biggest beneficiaries [of] the recovery,” the trajectory of hiring still depends “heavily” on the evolution of the pandemic. That’s especially true for smaller firms.
Richardson flagged “bottlenecks in hiring” but expressed optimism that labor market frictions “should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months.” Fingers crossed.
Recent PMIs suggest labor scarcity remains a key impediment for businesses across the world’s largest economy.
The disparity between vacancies and hires is stuck at a record high. The figure (above) shows the gap for food services and accommodation. And that’s to say nothing of the various supply chain disruptions which, when considered with the rising cost of labor (to entice workers off the sidelines) threatens to crimp margins for large companies and sink smaller firms altogether.
In any case, September’s ADP report was incrementally positive. But as we’ve seen time and again over the past year, it’ll be completely forgotten, if not negated, in the event NFP doesn’t “agree” with ADP’s Magic 8-Ball .
It will be interesting to see if the rising pressure to be vaxed hurts hiring or helps it. One can’t feed one’s self with “freedom.”