Economy

ADP: September Job Growth Highest In Seven Months

The pace of job growth quickened in September, to a level not seen in seven months, according to data released Wednesday by ADP and Moody’s Analytics.

The headline number shows that private firms added as many as 230,000 positions in the month, which comes within sight of the 241,000 jobs added in February and is leagues above the 168,000 positions that had been added in August. Economists had been expecting additions of about 185,000 jobs, per estimates from Refinitiv (known formerly as Thomson Reuters).

That job growth came even with the impact of Hurricane Florence, which hit the Carolinas last month.

Drilling down a bit, the construction sector was up by 34,000 positions, and firms that make tangible goods were responsible for 46,000 positions of the aforementioned 230,000 tally. Services led the way with growth of 184,000 positions.

The data bowed two days before the non-farm payrolls report, to be released by the Labor Department, and where economists also see gains of 185,000 positions.

In remarks made to the media after the data was released, Mark Zandi, chief economist at Moody’s Analytics, said the trajectory that is in place can bring unemployment down to levels not seen since the end of World War II, to roughly 3 percent, and down markedly from the current 3.9 percent level. That’s because the latest jobs numbers are consistent with average job growth numbers seen over the last 12 to 18 months.

“The labor market is tight and getting tighter,” he said on the call.

Zandi said the impact of the hurricanes could have been in the range of 25,000 to 30,000 positions.

In terms of business size, firms with between 51 and 499 employees added the most, with gains of 99,000 hires. That was followed by larger firms with 75,000 positions. Zandi did note that there had been what he termed “soft spots” in the September data – seen in verticals such as brick-and-mortar retailers, due to competition from online companies, and in mortgage-related professions, where higher mortgage rates have started to slow momentum in that sector.

Looking ahead, Zandi said there are more openings than unemployed, and wage growth is touching roughly 3 percent, double that seen as recently as the 2013-2014 timeframe. These are conditions that would be expected to be evident as an economy grows at potential, he said.

Such conditions are not sustainable, he cautioned, though when a tipping point may come remains a question for another day.

In terms of the overall economy, the latest numbers reported 4.2 percent GDP growth for the second quarter.

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