ADP Reports Private Sector Employment Increased by 42,000 Jobs in October

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Private sector employment increased by 42,000 jobs in October and pay was up 4.5% year over year, according to the October ADP National Employment Report.

Cotality Chief Economist Selma Hepp noted that with government-sourced labor data unavailable during the government shutdown, the ADP report has taken on outsized importance. “While private sector hiring shows modest improvement, concerns are emerging around the longer-term implications of AI on workforce dynamics,” she added. “At the same time, declining immigration and lower labor force participation across key demographic segments suggest that job creation may remain subdued.”

Hepp said this “evolving” labor landscape complicates the Fed’s ability to interpret economic signals and determine its next policy steps with confidence.

First American Senior Economist Sam Williamson agreed that alternative indicators are less comprehensive and more volatile than official government releases but noted that they collectively reinforce the view that the labor market is “cooling, not collapsing.”

ADP measures the U.S. labor market based on the anonymized weekly payroll data of more than 26 million private-sector employees.

“Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year,” said Nela Richardson, chief economist with ADP. “Meanwhile, pay growth has been largely flat for more than a year, indicating that shifts in supply and demand are balanced.”

October delivered a rebound from two months of weak hiring, but the bounce was not broad-based, the ADP report said. “Education and health care, and trade, transportation, and utilities led the growth. For the third straight month, employers shed jobs in professional business services, information and leisure and hospitality.”