Firms Shed 32,000 Jobs in September, ADP Reports
Data Adjustment Follows Revised 3,000 Decline the Month Before
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Payrolls at U.S. companies unexpectedly dropped in September, due at least in part to issues with data analysis.
Private sector payrolls decreased by 32,000 after a revised 3,000 decline a month earlier, according to ADP Research data released Oct. 1. The figure was below all estimates in a Bloomberg survey of economists.
ADP noted that they benchmark their data based on an expansive series from the Bureau of Labor Statistics, called the Quarterly Census of Employment and Wages. The recalibration resulted in a reduction of 43,000 jobs in September compared to pre-benchmarked data, the report said.
That suggests payrolls growth may have been slightly positive had it not been for the adjustment. However, ADP said the hiring trend was unchanged and job creation continued to lose momentum across most sectors.
“The most recent release of the QCEW contained a higher-than-normal number of missing or redacted values” for certain industry groups, ADP said in a statement. “This required the benchmark to be calculated at a coarser granularity than in previous years.”
The company used the full-year 2024 QCEW to gauge the nationwide distribution of employment across industries, states and establishment size. It’s based on state unemployment insurance tax records and covers nearly all US jobs.
The QCEW data is also used to benchmark the government’s measure of total payrolls annually. A preliminary estimate last month suggested that the adjustment would mark down payrolls in the year through March by a record 911,000.
Treasury yields declined while stock futures remained lower after the release.
Government Shutdown
The ADP data stand to be the highest profile report on the labor market this week as the government’s September employment numbers, scheduled for Oct. 3, will be delayed given the shutdown. ADP’s report may over-exaggerate the softness in the job market, as other sources generally point to anemic job growth, less appetite for hiring, few layoffs and modest wage gains.
“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,” said Nela Richardson, chief economist at ADP.
The Federal Reserve lowered interest rates last month given weakness in the job market, and officials are closely watching for any signs of further deterioration. But with several policymakers still wary of lingering inflation, it’s unclear how the central bank will proceed with additional rate cuts — especially if they don’t have the latest government jobs report in hand for their meeting at the end of this month.
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Payrolls declined in industries such as leisure and hospitality, business services and financial activities, as well as goods-producing sectors like construction and manufacturing, ADP said. Education and health services was one of the few areas to add headcount.
The Midwest was the only major U.S. region to shed jobs, and declines were concentrated in businesses with less than 500 employees. ADP bases its findings on payrolls covering more than 26 million U.S. private-sector employees.
The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed wage growth continued to gradually soften. Workers who changed jobs saw a 6.6% increase in pay, the lowest in a year. Those who stayed put saw a 4.5% gain, little changed from the prior month.
