Private-sector jobs in the US posted another solid advance in October, according to this morning’s release of the ADP Employment Report. In line with expectations, companies added a net 230,000 positions last month on a seasonally adjusted basis, a bit more than September’s healthy 225,000 increase. More importantly, the year-over-year trend for ADP’s payrolls data inched higher again. The slightly stronger annual pace follows a similar pattern in the government’s data through September. Is the long-awaited acceleration in job growth finally here? Friday’s update from the Labor Department may provide an answer. Meantime, the case for thinking positively is on the march.
“Employment continues to trend upward as we begin the last quarter of 2014, driven mostly by small- to mid-sized companies,” say Carlos Rodriguez, president and chief executive officer of ADP, in a press release today. “October’s job growth is the highest since June and the second highest gain of 2014.”
If the latest sign of progress in the labor market translates into hard data in Friday’s release from the government, we’ll have more evidence to say that the growth rate for payrolls is accelerating. Yes, we’ve heard this before, only to be disappointed. But this time may be different. Why? The trend looks encouraging. As the chart below illustrates, the government’s private-sector payrolls data is showing a modestly stronger increase in the year-over-year change. By the Labor Deparment’s reckoning, payrolls in the private sector grew 2.25% in the year through September—a two-year high. One good year-over-year data point could be noise, of course, but this encouraging number has company. The annual rate has shown a upward bias since March and so it appears that there’s genuine improvement here.
Today’s ADP data suggest that we’ll at least see a decent payrolls number on Friday. Even if it’s still premature to apply the “acceleration” label, it’s clear that the labor market is still showing a strong capacity for moderate growth. Given what’s going on in Europe, it’s reasonable to say that the US economy remains resilient, at least in relative terms.
“Demand is improving and businesses can’t count on productivity gains so they need to hire workers to meet that stronger demand,” Gus Faucher, a PNC Financial Services Group economist, tells Bloomberg. “The [US] economy is growing, and not just in a few industries, but pretty broadly. And job growth reflects that because we’re seeing broad-based job growth as well.”