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First Cut: ADP National Employment Report on expectations for October, but September revised down sharply

The ADP National Employment Report had an increase of 125,000 in private payrolls for October, matching market expectations. However, the September level was revised sharply lower to 93,000 (previously 135,000). Although the data can miss that in the BLS numbers — sometimes by a lot — this will serve as an alert that private payroll growth is moderating. The number shouldn’t prompt more than a little adjustment to the forecasts for the Friday employment report, if any.

It is no surprise that payrolls at goods providers declined -13,000 in October on top of a 5,000 dip in the prior month. Construction hiring was down 4,000, as was that for manufacturing and natural resources. The ADP numbers weren’t affected by the UAW strike at GM. Rather, they reflect the overall soft conditions in the factory sector and that hiring there has slowed to a trickle where it is happening at all. Construction hiring may be in part from lack of available workers, although this is the time of year when outdoor construction work tends to taper off.

The increase for service providers of 138,000 in October is probably more-or-less on trend. It included a gain of 35,000 for healthcare, 18,000 for professional and business services, and 17,000 for financial activities. There was a jump of 32,000 in hiring for trade, transportation, and utilities that may be in part hiring for warehouse and delivery services in advance of the winter holidays.


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