U.S. private sector employers added back 365,000 jobs in October, sharply missing expectations and underscoring the decelerating pace of recovery in the labor market as the coronavirus pandemic continues to worsen in the U.S.
The print marked the sixth straight month that private payrolls increased on net, following significant drops in each of March and April at the economic nadir of the pandemic period.
However, the figure was well below estimates. Consensus economists had been looking for private payrolls to rise by 643,000 in October, according to Bloomberg data. The ADP report on private payrolls had shown an increase of 753,000 jobs in September, according to the revised print.
Service-sector employers continued to make up the bulk of payrolls gains, with service-providing positions increasing by a net 348,000 in October, according to ADP. Leisure and hospitality jobs, which had been deeply impacted by stay-in-place orders this spring, grew by 125,000, followed closely by education and health services positions with a rise of 79,000. In the goods-producing sector, private payrolls rose by a net 17,000 as each of manufacturing, construction and mining positions rose.
ADP’s report comes, as usual, two days before the U.S. Department of Labor’s (DOL) monthly report on non-farm payrolls, which is used as the “official” gauge of employment gains and losses in the U.S. As of Wednesday morning, the DOL report was expected to report an increase of 700,000 private payrolls for October.
While ADP’s report has typically provided a directional sense of whether payrolls would rise or fall for the month, its usefulness as a gauge of the DOL print has tended to stop there. Between March and August, the initial ADP payrolls figure has underestimated private payrolls in the DOL’s figure by an average of 1.6 million per month, according to an analysis from UBS.
But in terms of trends in the labor market, each of ADP’s monthly reports and the Department of Labor’s weekly jobless claims and monthly non-farm payrolls reports have convened in pointing to a labor market that has improved from April’s lows, but at a slowing rate. By ADP’s measure, private payrolls slumped by a record 19.4 million in April before rebounding by a record 4.5 million in June. Gains have been much more muted since then, however, with net payroll gains failing to breach the 1 million mark for each of the past four months.
An increase in the number of coronavirus cases in the U.S. and Europe has also threatened to upend further progress in the labor market’s recovery. Earlier this week, more than 93,000 cases were reported across the country on Monday alone, for the second-highest daily total since the start of the coronavirus pandemic, according to data cited by the New York Times.
Individual companies in industries hardest hit by the pandemic have also recently announced that further job cuts would be forthcoming. Last week, oil major Exxon Mobil (XOM) said planned workforce reductions would impact approximately 1,900 workers in the U.S. alone. And Boeing (BA) last week announced plans for deeper job cuts that would bring its workforce down by another 7,000 employees by the end of 2021.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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