Private-sector employment in the U.S. rose by 90,000 jobs in September, according to the latest ADP National Employment Report, exceeding economists' expectations and marking a rebound from a weaker August. The report, released Wednesday, follows a three-month slowdown in hiring and indicates stabilization in the labor market.
Financial and professional services sectors experienced job losses, with financial activities shedding 16,000 jobs and professional and business services losing 11,000 positions. The strongest gains were recorded in education and health services (+55,000 jobs), leisure and hospitality (+22,000 jobs), manufacturing (+17,000 jobs), and construction (+15,000 jobs).
Pay growth remained solid, with base pay increasing 3.0% year-over-year for job-stayers and nearly 5.0% for job-changers. Construction and manufacturing wages saw notable gains, rising 4.0% and 3.5%, respectively. Medium-sized businesses (50-249 employees) accounted for the majority of hiring, adding 54,000 jobs, while small businesses (1-19 employees) contributed 23,000 jobs and large businesses (500+ employees) added 14,000 jobs.
Regional and sectoral breakdown
The Northeast region led job growth, adding 56,000 positions, while the South, Midwest, and West saw more modest gains. Goods-producing sectors, including manufacturing and construction, contributed 31,000 jobs, while service-providing industries added 59,000 jobs. The information sector saw a modest increase of 3,000 jobs, while natural resources and mining lost 1,000 jobs.
Context and implications
The September ADP report follows a downwardly revised gain of 36,000 jobs in August and comes ahead of the Bureau of Labor Statistics' nonfarm payrolls report, which is expected to show an increase of 84,000 jobs and an unemployment rate holding steady at 4.1%. Economists note that the current pace of job growth is well above the estimated breakeven rate of 20,000 jobs per month, which is the number needed to maintain a stable unemployment rate.
ADP Chief Economist Dr. Nela Richardson described the report as “a strong report”, emphasizing that “after a three-month slowdown, job creation rebounded and pay growth remained solid.” The data aligns with recent statements from Federal Reserve officials, who have indicated that the labor market remains largely sound despite concerns earlier in the year. Policymakers have shifted focus to persistent inflation, which prompted a quarter-percentage-point rate hike in September.
Broader labor market trends
The report highlights a growing divide in the labor market, with healthcare, education, and hospitality sectors continuing to expand while white-collar industries face challenges. Experts suggest that artificial intelligence (AI) and higher interest rates may be contributing to the decline in financial and professional services jobs, particularly at the entry level. Kevin Thompson, CEO of 9i Capital Group, noted that the job market for college graduates and young professionals is among the most challenging in years, with the decline in financial jobs potentially linked to reduced financial activity amid higher borrowing costs.
The ADP report serves as a precursor to the government’s official jobs data, which will provide further clarity on the state of the labor market. Analysts will closely watch the October 1 release of planned layoffs and weekly unemployment claims, as well as the September jobs report, for additional insights into hiring trends and economic stability.