US companies add more jobs than forecast, ADP data show

The advance in hiring represents a rebound after five straight months of slower growth, especially from the prior month’s reading that was the weakest since March 2023.

US companies added more jobs than expected last month, at odds with other indicators that show a cooling labour market.

Private payrolls increased 143 000 in September after an upwardly revised 103 000 advance in August, according to the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The Bloomberg survey of economists had called for a gain of 125 000 jobs.

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The advance in hiring represents a rebound after five straight months of slower growth, especially from the prior month’s reading that was the weakest since March 2023. Even so, the three-month average eased to 119 000, one of the lowest levels since 2020.

Most other data indicate the labour market is slowing. Unemployment has risen steadily in recent months and separate measures of job growth have cooled, prompting the Federal Reserve to cut interest rates in September by a larger-than-usual amount to stem further weakening.

Fed Chair Jerome Powell on Monday described the labour market as solid but said conditions have “clearly cooled over the past year.” He added that “we do not believe that we need to see further cooling in labour market conditions” to achieve the central bank’s target of 2% inflation.

The ADP data precede the government’s monthly jobs report on Friday, which is forecast to show a second month of moderate payroll growth in September and the unemployment rate holding at 4.2%.

Separate data out Tuesday showed that while job openings unexpectedly increased in August, the hiring rate matched the lowest reading since 2013, excluding the onset of the pandemic. Another gauge from the Institute of Supply Management showed the smallest share of respondents increasing manufacturing employment since May 2020.

Wage growth in September cooled. For workers who changed jobs, earnings rose 6.6% from a year earlier, the slowest since April 2021. Pay gains for those who stayed in their current position eased slightly to 4.7%, ADP’s report out Wednesday showed.

“Stronger hiring didn’t require stronger pay growth last month,” said Nela Richardson, chief economist at ADP. “Typically, workers who change jobs see faster pay growth.”

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Hiring was broad across industries, led by leisure and hospitality as well as construction. Information was the only sector to cut jobs last month. Job gains were also spread out geographically, and firms with fewer than 20 employees were the only ones to reduce headcount.

While layoffs are still generally low, some companies in recent days have announced plans to let workers go. CVS Health Corp plans to cut roughly 2 900 jobs as part of a strategic review of its business, while Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce global headcount by thousands of jobs.

ADP bases its findings on payroll data covering more than 25 million US private-sector employees.

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