US private payrolls saw a stronger-than-expected increase in September, reinforcing the notion that labor market conditions are not deteriorating.
According to the ADP National Employment Report released on Wednesday, private payrolls surged by 143,000 jobs last month, following an upwardly revised increase of 103,000 in August. Economists surveyed by Reuters had anticipated a rise of 120,000 positions, up from the previously reported gain of 99,000 in August.
The ADP report, co-developed with the Stanford Digital Economy Lab, was issued ahead of the more detailed and closely monitored September employment report from the Labor Department’s Bureau of Labor Statistics, set to be released on Friday. Historically, there has been limited correlation between the ADP and BLS employment reports, with initial ADP figures often underestimating private payroll growth this year.
Government data revealed that the labor market remains robust, with 1.13 job openings for every unemployed person in August, up from 1.08 in July. The slowdown in hiring, against the backdrop of an immigration-driven surge in labor supply, is contributing to the labor market's deceleration.
In response to growing concerns about the labor market's health, the Federal Reserve cut its benchmark interest rate by 50 basis points last month to a range of 4.75 per cent to 5.00 per cent, marking the first reduction in borrowing costs since 2020. The US central bank is anticipated to further reduce interest rates in November and December.
A Reuters survey of economists predicts that private payrolls likely increased by 125,000 in September, following a rise of 118,000 in August. With anticipated solid gains in government employment, nonfarm payrolls are expected to have climbed by 140,000 last month, up from 142,000 in August. The unemployment rate is projected to remain unchanged at 4.2 per cent, having risen from 3.4 per cent in April 2023.
