Recent data reveals a surprising surge in the U.S. ADP employment figures, despite devastating storms and large-scale strikes in the Southeast. The ADP report showed an increase of 233,000 jobs in October, the largest gain since July 2023, significantly surpassing expectations of 114,000. September's numbers were also revised upwards from 143,000 to 159,000.
Nela Richardson, ADP's Chief Economist, highlighted the resilient strength of the labor market even amidst recovery from hurricanes. The data defies analysts' predictions of an economic slowdown post hurricanes Helen and Milton, which severely impacted Florida and North Carolina.
Strikes involving port workers and Boeing (BA, Financial) machinists inevitably affected the job market. Some economists view the October ADP report as an outlier, suggesting the Federal Reserve might overlook it during the upcoming monetary policy meeting.
Despite these events, the ADP report indicates a stable U.S. labor market with a 4.6% year-over-year increase in wages, the lowest since 2021. Employment rose notably in sectors such as education and health services (53,000 jobs), trade/transportation/utilities (51,000 jobs), construction (37,000 jobs), and financial services (11,000 jobs). Manufacturing was the only sector to see a decline, shedding 19,000 jobs.
Larger firms with over 500 employees contributed 140,000 of the new jobs, while small businesses with fewer than 50 employees saw minimal change, adding only 4,000 jobs.
The U.S. Labor Department is set to release a more comprehensive October non-farm payroll report, expected to show 115,000 new jobs and a steady unemployment rate of 4.1%. However, differences between ADP and non-farm reports are common as the latter includes government job data. Goldman Sachs economists note ADP data is typically less sensitive to natural disasters and strikes compared to the government report.
