Between Hiring and Hesitation: U.S. Private Payrolls Rise as the Labor Market Finds Its Balance

Labor markets rarely move in straight lines. A month of slower hiring can be followed by renewed activity, while businesses in one industry expand as employers elsewhere become more cautious. September brought another turn in that shifting pattern across the United States.

Private-sector employment increased by 90,000 jobs in September, according to the ADP National Employment Report. The increase followed a downwardly revised gain of 36,000 jobs in August and exceeded the 70,000 increase economists surveyed by Reuters had expected.

The report was produced by ADP Research in collaboration with Stanford’s Digital Economy Lab. It provides a private-sector measure of employment based on payroll information, offering an early view of hiring before the federal government releases its broader employment report.

The September increase was led by education and health services, which added 55,000 jobs. Leisure and hospitality contributed another 22,000, while manufacturing added 17,000 and construction increased employment by 15,000.

Not every part of the private economy moved in the same direction. Financial activities lost 16,000 jobs, while professional and business services declined by 11,000. The differences illustrate how the overall employment figure is being shaped by separate forces across industries.

Smaller and medium-sized businesses also contributed to the increase. Employers with 50 to 249 workers added 18,000 jobs, while companies with 250 to 499 employees added 36,000. Small businesses added 23,000 positions, while large employers contributed 14,000.

Pay continued to rise as well. ADP reported that base pay increased 3.2% year over year, while gross pay rose 4.7%. Workers who changed jobs recorded stronger base-pay growth than those who remained with the same employer.

The report nevertheless needs to be viewed within the wider employment picture. Reuters notes that the ADP measure has historically been an imperfect guide to the private payroll estimate produced by the Bureau of Labor Statistics. The government’s September employment report was due later in the week.

Other indicators have suggested that the labor market remains relatively balanced. The Bureau of Labor Statistics reported 1.01 job openings for every unemployed person in August, down slightly from 1.06 in July. At the same time, consumer perceptions of the labor market weakened during September.

The contrast between renewed hiring and more cautious sentiment gives the latest numbers a measured quality. Employers are still adding workers, but the distribution of those jobs shows that demand is not equally strong everywhere.

September’s 90,000-job increase therefore represents one piece of a larger picture. Private employment regained momentum after several months of slower growth, while wages continued to rise and some industries expanded more rapidly than others. The next federal employment report will provide another view of how that labor-market story is developing as autumn begins.