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First Cut: ADP National Employment Report puts private payrolls up 135,000 in September, downward revision to prior month

The ADP National Employment Report put private payroll gains at up 135,000 in September, softer than the up 157,000 in August which was revised sharply lower (previously up 195,000). The reading was somewhat below market expectations for the ADP report, but actually matched those for the government report set for released on Friday at 8:30 ET. In any case, it is the downward revisions to the strength in the prior month that will cast this data into a less positive light. Nonetheless, payroll gains are still sufficient to absorb new workers coming into the labor market. If the pace of job gains has downshifted, it is still reasonably healthy for a modestly expanding economy.

The headline change in payrolls is not materially different from market expectations given the sometimes big misses in payroll changes between the ADP numbers and the government data. The shortfall will probably not lead forecasters to change their estimates for the Employment Situation for September.

Goods producers added 8,000 jobs in September after a similar up 10,00 in August. This was mainly due to activity in construction (up 9,000) while manufacturing was only sightly higher (up 2,000), and mining declined a bit (down 3,000).

Service sector jobs were up 127,000 in September after 146,000 in August. Hiring was strongest for professional and business services (up 20,000), healthcare (up 35,000), and trade, transportation, and utilities (up 28,000).

The numbers are consistent with the slowdown in the manufacturing sector, the revival in the housing market, and active consumer spending and demand for services.

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