In October, the United States witnessed a workforce expansion of 113,000 employees in the private sector, as per a report from ADP, a prominent payroll firm. This growth was predominantly driven by the education and health care sectors. Although falling short of the anticipated 150,000 increase, it marked an improvement compared to September when a surprisingly low 89,000 jobs were added.
ADP's Chief Economist, Nela Richardson, noted that no single industry dominated the hiring landscape in October. Additionally, the significant wage increases observed in the post-pandemic era seem to have plateaued. Richardson remarked, "The October data offers a comprehensive overview of the job market. Despite the slowdown in the labor market, it remains robust enough to support consumer spending."
Mid-sized companies played a pivotal role in this employment trend, with businesses employing 50 to 249 workers contributing 96,000 new jobs. Alongside the education and health care sectors, the trade and transportation industry displayed strength by adding an additional 35,000 jobs.
Year-over-year wage growth stood at 5.7%, representing a decline from the 5.9% recorded in September, marking the lowest figure since late 2021.
The release of the ADP report marked the initiation of the week's focus on employment data. On the same day, the Labor Department revealed the number of job openings at the end of September, with analysts predicting a slight decrease to 9.3 million open positions, down from the 9.6 million reported in August. Looking ahead, the monthly jobs report for October, scheduled for release on Friday, is anticipated to show an increase of 190,000 jobs, a decline from the surprising 336,000 jobs generated in September.
A notable development in the labor market is the deceleration in wage growth. In the third quarter, employment costs rose by 1.1%, surpassing expectations but continuing the overall downward trend. Wells Fargo economists commented, "The 1.1% increase in the Employment Cost Index in Q3 exceeded expectations but indicated a gradual easing of labor cost pressures." They also expect further moderation in compensation cost growth, which is likely to deter the Federal Reserve from implementing additional interest rate hikes.
Rucha Vankudre, a senior economist at Lightcast, an online job and data analytics firm, emphasized that current employer priorities now focus more on retaining existing employees than on hiring new ones. Vankudre underscored, "The current focus is on retention more than hiring. Employers must assume that employees have alternative opportunities. Therefore, competitiveness lies in demonstrating that your company is not only an excellent place to work at present but also in the future."
On Wednesday afternoon, the Federal Reserve was set to announce its latest decision on interest rates. Analysts widely expected the central bank to maintain the current interest rates, continuing the pause initiated in its rate hike campaign in September.