ADP: Employers Add 113,000 Workers in October

Private employers added 113,000 workers in October, led by the education and health care sectors, payroll firm ADP said on Wednesday.

The number was below forecasts of a 150,000 gain but a recovery from September, when a surprisingly low 89,000 jobs were created.

“No single industry dominated hiring this month, and big post-pandemic pay increases seem to be behind us,” said ADP Chief Economist Nela Richardson. “In all, October’s numbers paint a well-rounded jobs picture. And while the labor market has slowed, it’s still enough to support strong consumer spending.”

Mid-sized firms were the main hirers as companies with 50 to 249 employees accounted for 96,000 new jobs. In addition to education and health care, the trade and transportation sector came in strong with an additional 35,000 jobs.

Wage growth came in at 5.7% year over year, down from 5.9% in September and the lowest reading since late 2021.

The ADP report kicks off the week’s focus on employment data. Also Wednesday, the Labor Department announces the number of job openings at the end of September, with analysts forecasting 9.3 million jobs open, down a little from the 9.6 million in August. Friday will bring the monthly jobs report for October. Expectations are for an increase of 190,000, down from the surprise 336,000 created in September.

One promising trend from the labor market has been the slowing growth in wages. On Tuesday, the government said employment costs rose 1.1% in the third quarter. That was above expectations but still trending down.

“The 1.1% rise in the Employment Cost Index in Q3 was a touch stronger than expected but showed labor cost pressures continue to slowly ease on trend,” said Wells Fargo economists. “With the ECI still running north of 4%, labor cost growth remains too high to be consistent with the Fed’s 2% inflation target. However, we expect growth in compensation costs to slow further ahead, with the recent moderation enough to keep the Fed from additional rate increases.”

Rucha Vankudre, senior economist at online job and data analytics firm Lightcast, said that employers are prioritizing keeping their existing employees nowadays more than finding new workers.

“The fight at this point is about retention even more than hiring. As an employer, you have to assume employees have other options,” Vankudre said. “So part of being competitive is showing that your firm is a good place to work, not just now but in the future.”

The Federal Reserve is set to announce its latest decision on interest rates Wednesday afternoon with analysts overwhelmingly expecting the central bank to hold rates steady after taking a pause from its campaign of rate hikes in September.