ADP Employment Report October 2022

Private payroll growth remained strong in October while worker compensation also rose, particularly in the leisure and hospitality industry, according to a report released Wednesday by payroll processing firm ADP. .

Companies added 239,000 positions for the month, ahead of the Dow Jones estimate of 195,000 and better than the downgraded 192,000 in September. Wages rose 7.7% on an annual basis, down 0.1 percentage point from the previous month.

Job gains were particularly strong in the key leisure and hospitality sector, which added 210,000 jobs while wage growth accelerated by 11.2%. The industry, which includes hotels, restaurants, bars and related businesses, is seen as an indicator as it was the hardest hit by Covid and is still below pre-pandemic levels.

All of the employment growth came from service-related industries, which added 247,000 jobs, while goods-producing sectors lost 8,000 jobs, mostly due to a loss of 20,000 manufacturing jobs. Trade, transport and public services increased by 84,000.

“That’s a very high number given the maturity of the economic recovery, but hiring hasn’t been widespread,” said ADP chief economist Nela Richardson. “Goods producers, which are interest rate sensitive, are pulling back and job changers are imposing weaker wage gains. Although we are seeing early signs of Fed-induced demand destruction, this only affects certain sectors of the labor market.”

The Federal Reserve has raised interest rates in an effort to calm inflation, which is approaching its highest level in more than 40 years. A key focus is the historically tight job market, where job openings outnumber available workers by a margin of nearly 2 to 1.

While the main ADP figure was strong, the details looked weaker.

Along with declines in construction jobs, information (-17,000), professional and business services (-14,000) and financial activities (-10,000) also posted losses.

Depending on company size, companies with between 50 and 249 employees made virtually all of the gains, adding 241,000.

The ADP report comes two days before the Bureau of Labor Statistics’ most closely watched nonfarm payrolls tally. This report is expected to show growth of 205,000, down from 263,000 in September.

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