September Records Largest Decline in Private Payrolls in Over Two Years
The U.S. labor market exhibited signs of deceleration as private payrolls shrank by 32,000 jobs in September, marking the moast significant drop since March 2023.This unexpected contraction underscores increasing employer caution amid persistent economic uncertainties.
Government Shutdown Disrupts Key Employment Data Releases
The ongoing government shutdown has caused notable interruptions to official labor market data dissemination. The Bureau of Labor Statistics (BLS) will not publish its standard nonfarm payroll report for September or the weekly jobless claims figures this week-an occurrence not witnessed since 2013. this data gap elevates the importance of alternative sources such as ADP’s payroll report for assessing employment trends ahead of the federal Reserve’s policy meeting scheduled for late October.
Uneven Job Market Shifts across Industries
September’s job changes varied widely across sectors. Education and health services saw an increase of 33,000 positions as schools resumed operations and healthcare demand remained strong. In contrast, leisure and hospitality lost 19,000 jobs following the end of peak travel season.
- Other services: Decreased by approximately 16,000 roles
- Professional and business services: Reduced by around 13,000 positions
- Trade, transportation & utilities: Fell by about 7,000 jobs
- Construction sector: Shed nearly 5,000 employees
The total workforce within service-providing industries contracted by roughly 28,000 workers while goods-producing sectors experienced a modest decline near 3,000 employees.
Differing Impacts Based on Company Size
The employment shifts were notably influenced by firm size: businesses with fewer than 50 employees cut close to 40,000 jobs overall; conversely large corporations employing over 500 people expanded their headcount by approximately 33,000 during September.
Cautious Hiring Persists Despite Robust economic Expansion
The U.S. economy demonstrated considerable strength earlier this year with annualized growth rates approaching 4%, supported by regional Federal Reserve GDP trackers’ estimates. The second quarter posted a near 3.8%% increase followed closely by projections around 3.9%% growth for Q3; however labor market momentum appears to be losing steam amid these positive economic signals.
“The recent numbers confirm what we’ve been seeing: employers are exercising restraint when it comes to hiring,” stated ADP’s chief economist Nela Richardson.
Persistent risks Despite Low Unemployment Figures
The unemployment rate remains relatively low at about 4.3%, yet concerns linger regarding potential weakening in labor demand relative to available workers.
“While my baseline forecast does not predict significant further deterioration in employment conditions,” remarked Boston Fed president Susan Collins,
“there is growing risk that job openings may fall short compared to worker availability-possibly pushing unemployment higher than desired.”
Salaries Continue Rising but Wage Growth Shows Signs of Slowing down
Averaged wages increased steadily through September with year-over-year gains near 4.5%, consistent with August levels according to ADP analysis.
salaries for individuals changing jobs rose more slowly at roughly 6.6%, down half a percentage point from last month.
This moderation aligns closely with broader hiring slowdowns observed nationwide across multiple industries.
BLS benchmark Adjustments Prompt revisions in Employment Estimates
BLS benchmark revisions led ADP analysts to adjust August’s previously reported private sector gain downward-from an initial +54,000 new positions estimate-to now reflect a slight contraction near -3,000.
“Despite these updates,” says Richardson,“the overall narrative remains unchanged: hiring momentum is clearly waning.”
