U.S. companies experienced a loss of approximately 32,000 jobs in September, according to a report from payroll processing company ADP, raising concerns about the current state of the labor market.
Data released by payroll processing company ADP indicates that U.S. companies lost around 32,000 jobs in September, a development that has raised significant concerns about the labor market’s stability. This report, which is part of ADP’s monthly private-sector employment assessment, was released on Wednesday and deviated sharply from Wall Street expectations, which had anticipated job growth of 45,000 for the month.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market: that U.S. employers have been cautious with hiring,” said ADP chief economist Nela Richardson. This report comes in the wake of more optimistic economic indicators regarding gross domestic product and unemployment claims.
The timing of this report is particularly notable, as it may be the only employment data available this month. The Bureau of Labor Statistics (BLS) is currently unable to publish its official jobs report due to a government shutdown. The shutdown occurred after the Trump administration and Democratic lawmakers failed to reach an agreement on funding, raising the possibility that the impasse could persist indefinitely.
Among the companies affected, those with fewer than 50 employees experienced the most significant job losses. Specifically, firms employing between 20 and 49 workers lost 21,000 jobs, while those with fewer than 19 employees saw a reduction of 19,000 jobs. The losses were widespread across various industries, with professional and business services, as well as leisure and hospitality, experiencing some of the largest declines. Conversely, health care businesses were the only sector to show consistent employment growth throughout the year.
Richardson also noted that the data comes with some important caveats. She explained that preliminary “rebenchmarking” of the data played a crucial role in the negative revision for August and the estimated job losses for September. “We found that once we benchmarked that data, it actually shows a September slowdown that has been consistent with what we’ve been reporting all year,” Richardson stated, highlighting that the process resulted in a reduction of 43,000 jobs in September compared to pre-benchmarked figures.
“In fact, though the numbers changed, the story and the narrative and the trend remain the same: Hiring momentum has slowed from the beginning of the year through September,” she added.
While ADP’s reports have faced criticism from economists for their inconsistent track record in short-term predictions, they are still regarded as a valuable indicator of the labor market’s trajectory. The discrepancies between ADP’s figures and the official monthly jobs numbers released by the BLS can lead to confusion, but the trends highlighted in ADP’s report are closely monitored by analysts.
As the labor market continues to navigate these challenges, the implications of these job losses may resonate throughout the economy, influencing both consumer confidence and business investment decisions.
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