Private-sector job growth slows to lowest level since May, ADP says
The nation’s private-sector employers slowed their pace of hiring last month to the lowest level since May, but the still-decent job growth should keep the Federal Reserve on track for an interest rate hike before the end of the year.
Companies added 147,000 net new jobs in October, down from an upwardly revised 202,000 the previous month, payroll firm Automatic Data Processing said Wednesday.
Last month’s job growth, which was below analyst estimates, was the lowest since ADP reported just 31,000 net new positions added in May.
But the labor market remains healthy, said Mark Zandi, chief economist at Moody’s Analytics. The company assists ADP in preparing the monthly report.
“Job growth remains strong although the pace of growth appears to be slowing,” Zandi said.
“Behind the slowdown is businesses’ difficulty filling open positions,” he said. “However, there is some weakness in construction, education and mining.”
Construction companies reduced their payrolls by 15,000 in October after adding 27,000 net new jobs the previous month.
The private education sector also lost jobs. Payrolls were trimmed by 12,000 after a 6,000 gain in September.
Natural resources and mining companies cut 2,000 net jobs. The sector has been reducing payrolls for nearly two years because of the steep drop in oil prices.
On the positive side, professional and business services firms added 69,000 net new jobs, up from 58,000 in September.
The ADP report signals that Friday’s Labor Department report on overall job growth — private and public sector — could fall short of expectations.
Analysts are forecasting the economy added 178,000 net new jobs last month, up from 156,000 in September. The unemployment is expected to tick down to 4.9%.
Fed policymakers conclude a two-day meeting on Wednesday, but are not expected to make any change in the central bank’s key short-term interest rate so close to the presidential election.
Fed Chairwoman Janet L. Yellen said she expected a small rate hike by the end of the year if the labor market and economy continued to improve.
Monthly job growth of about 150,000, a slowdown from earlier in the year, would be more than enough to offset new entrants into the labor market and should be enough to keep the Fed on track for a rate hike at its next meeting in December, analysts said.
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