. ADP Report: US Private Payrolls Miss Expectations

ADP Report: US Private Payrolls Miss Expectations

ADP Report: US Private Payrolls Miss Expectations

01 Nov 2023

Private Payrolls in the US for October Fall Short of Anticipated Figures – ADP.

In October, the United States witnessed a slight deviation from anticipated figures in the private payroll sector. The ADP National Employment Report disclosed that there was an addition of 113,000 jobs during the month, falling short of the 150,000 jobs that economists, as surveyed by Reuters, had predicted. While this number may not entirely encapsulate the broader dynamics of the labor market, it does hint at some interesting trends.

Understanding the ADP Report

The ADP National Employment Report, developed in conjunction with the Stanford Digital Economy Lab, is often seen as a precursor to the comprehensive employment report published by the US Labor Department. This awaited report for October is expected to arrive later this week, providing more insights into the job market.

A Quirk in the Numbers

One must exercise caution when interpreting the ADP report. Historically, it hasn’t always been a mirror image of the private payroll count in the official employment report. This divergence can sometimes be attributed to the methodologies and sources used in crafting these reports.

Resilience in the Labor Market

Despite a series of interest rate hikes amounting to 525 basis points by the Federal Reserve since March 2022, the labor market has demonstrated resilience. Consumer sentiment regarding the job market, as indicated by a recent survey by the Conference Board, remained positive in October. This positivity hints at underlying strength in the economy, even if the recent ADP figures seem underwhelming.

Looking Ahead to the Official Report

The Labor Department’s Bureau of Labor Statistics is expected to reveal a gain of 158,000 private payrolls in October. This follows a notable increase of 263,000 jobs in September, according to a survey of economists conducted by Reuters. However, it’s essential to consider potential factors contributing to the slowdown.

Strikes and Their Impact

One factor that might have contributed to the less-than-rosy employment figures is the strikes initiated by the United Auto Workers (UAW) union against major automakers in Detroit. These labor actions can have a significant impact on manufacturing payrolls, disrupting the flow of jobs in the sector.

The government’s report from the previous week noted that during the survey period for the October employment report, there were at least 30,000 UAW members on strike. This disruption could indeed have a noticeable impact on the employment numbers. The Reuters poll also suggests that nonfarm payrolls are expected to increase by 180,000 jobs in October, a notable dip from the robust count of 336,000 in September.

Conclusion

In conclusion, the October ADP report on private payrolls falling short of expectations is an intriguing development in the broader context of the US labor market. While the figure is below predictions, it’s important to await the comprehensive report from the US Labor Department for a more accurate assessment of the job market’s health.