Private payrolls in the US posted a solid gain last month, marking a dramatic improvement after September’s nearly flat increase. Companies added 252,000 workers in October, according to this morning’s release from the Labor Department – a robust revival vs. the trivial 15,000 rise in the previous month.
Although the rebound is welcome news, the gain fell well short of expectations. Econoday.com’s consensus forecast was looking for a much-stronger rise of 320,000 for private payrolls. Nonetheless, today’s update confirms that the soft data in September was a temporary setback, largely due to two hurricanes that created havoc in several southern states in late-August and September.
Today’s figures are still a disappointment relative to ADP’s estimate of private job growth in October via the year-over-year trend. This data shows that the annual pace of hiring perked up to a 2.1% rise, the strongest advance in more than a year. By contrast, today’s government numbers reflect a mildly firmer year-over-year increase, but one that continues to show a decelerating trend.
The Labor Department’s estimate of a 1.6% annual increase in private employment marks a slightly stronger pace vs. September’s 1.5% rise. Better, but it’s still well below ADP’s solid 2.1% increase. Note, too, that the government’s latest numbers for private employment indicate a trend that’s just a hair above the slowest year-over-year rise in six years.
The obvious question: Which dataset is the genuine article in terms of the trend outlook? Although both series point to a healthy expansion, the government’s bean counters are effectively telling us that the two-year downshift in the labor market rolls on. ADP, on the other hand, tells a different story, namely, that the labor market’s growth rate is reaccelerating.
Next month’s updates for November may reveal which one’s right – just in time for the Fed’s interest rate decision that follows a few days later. A decision, by the way, that’s widely expected to bring us higher interest rates. The ADP data certainly supports that forecast. The government’s numbers, however, leave room for doubt.