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U.S. private employers created more jobs than expected in September as COVID-19 cases abated after a summer peak and eased stress in the job market.
The private payroll rose by 568,000 last month, ADP said in its closely watched monthly report on Wednesday. Economists were looking for an increase of 430,000 private payrolls, according to Bloomberg consensus data. In the previous month, private sector jobs had increased by 340,000. This figure has been revised down from the 374,000 previously reported for August.
Wednesday’s report reflected an acceleration in hiring in the US service sector, with 466,000 net jobs returning last month. The biggest contributor to this, in turn, came from the leisure and hospitality sectors, with employers in these companies creating 226,000 jobs. Job gains in education and health, professional and business services also exceeded 60,000 each.
The goods-producing sector also saw a strong recovery in hiring, with payroll gains increasing by 102,000 to more than double the number of jobs restored in August. Manufacturing and construction jobs each increased by nearly 50,000.
Wednesday’s report marked the ninth consecutive month of private payroll growth in the U.S. economy, with the labor market making strides to recoup jobs lost during the pandemic. Other reports have also highlighted certain trends in the strengthening of domestic employment: the indexes of employment in the manufacturing and services sector of the Institute for Supply Management remained in expansionary territory in September, and the demands of Weekly unemployment fell to a pandemic-era low at the start of the month.
“Ultimately, demand for labor remains exceptionally strong, and with the COVID cases appearing to have peaked early last month, we expect the pace of hiring to be more in line with its recent trend, ”Sam Bullard, senior economist for Wells Fargo Corporate and Investment Banking, wrote in a note.
ADP’s private wage report also sets the tone for the Labor Ministry’s “official” September employment report on Friday. In this report, economists expect wage bill gains to accelerate after a severely disappointing employment report in August, when only 235,000 jobs returned against the more than 700,000 expected at the time. The consensus estimate of non-farm payroll gains in September is 488,000.
Many economists have warned that ADP’s report does not serve as an accurate indicator of wage bill trends seen in government data due to differences in methodology. ADP counts active employees on the firm’s payroll in its overall figure, while the Department of Labor counts those paid during the survey period in the increase or decrease of its non-farm payroll.
One of the biggest discrepancies between ADP’s private wages report and last month’s Ministry of Labor employment report concerned employment growth in the service sector. ADP reported that 201,000 leisure and hospitality jobs returned in August, while the Bureau of Labor Statistics report did not reflect any.
“We wouldn’t be surprised to see the BLS revise its August estimate for this sector, which, despite last month’s hiatus, accounted for 51% of the roughly 4.1 million private sector job gains since the start. of the year, “said Brett, senior US economist at Deutsche Bank. Ryan wrote in a note.
The Labor Department is due to release its monthly employment report on Friday at 8:30 a.m. ET.
This post is broken. Check back for updates.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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