US Companies Add Fewer Jobs Than Forecast, ADP Data Show

(Bloomberg) -- US companies added fewer jobs than forecast in October, suggesting demand for workers is starting to wane.

Private payrolls increased 113,000 last month after posting the weakest advance in two years in September, according to figures published Wednesday by the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The median estimate in a Bloomberg survey of economists called for a reading of 150,000.

Job gains were broad across establishment sizes and industries, led by education and health services as well as trade and transportation. Leisure and hospitality, which has helped drive the post-pandemic recovery, added the fewest positions since early 2022.

Companies in the professional and business services sector cut payrolls, while all regions except the Midwest added jobs.

The report, especially when taken with the prior month's print, suggests the labor market is starting to cool more markedly. Though unemployment remains low and wages are still rising at a firm pace, employers are increasingly scaling back hiring as the job market normalizes from its pandemic highs.

The ADP data showed further cooling in wage growth. Workers who stayed in their job saw a 5.7% median pay increase in October from a year ago, according to Wednesday's report. For those who changed jobs, wages rose 8.4%. Both were the slowest pace since 2021.

“No single industry dominated hiring this month, and big post-pandemic pay increases seem to be behind us,” said Nela Richardson, chief economist at ADP. “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.”

Federal Reserve officials pay close attention to wages as they tend to move in tandem with inflation. Though central bankers are largely expected to hold interest rates steady later Wednesday, a sustained re-acceleration in inflationary pressures risks tilting them toward further rate hikes in the coming months.

Separate data out this week will offer further clues into the direction the US labor market is headed. Figures due later this morning are expected to show job openings fell in September but remained elevated, while the Labor Department's jobs report due Friday is projected to show private employers added around 150,000 payrolls in October.

ADP's report is based on payroll data covering more than 25 million US employees.

--With assistance from Chris Middleton and Reade Pickert.

(Adds graphic)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.