Steve Moore, senior economist at FreedomWorks, shares economic insights in Making Money.
U.S. corporate hiring rose less than expected in October, according to the ADP National Employment Report released Wednesday morning, the latest sign that the labor market is beginning to cool amid higher interest rates.
Companies added 113,000 jobs last month, lower than the 150,000 gain forecast by economists polled by Refinitiv but higher than the unrevised gain of 89,000 in September.
The weaker-than-expected report is the result of an aggressive tightening campaign by the Federal Reserve, which has raised interest rates to their highest level since 2001. Fed officials, including Chairman Jerome Powell, have opened the door to at least one more rate hike this year, signaling that rates will remain elevated for longer while they assess whether high inflation has finally receded.
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Workers replace power lines in Monterey Park, California, early on October 6, 2023. ((Photo by FREDERIC J. BROWN/AFP via Getty Images) / Getty Images)
In a potentially welcome sign for the Fed as it tries to control inflation, wages fell further in October.
According to the report, annual wages rose 5.7% last month, marking the 13th straight month of slowing growth. For workers who changed jobs, wages rose 8.4%, compared to 9% the previous month.
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“No single industry dominated hiring this month, and the big post-pandemic wage increases appear to be behind us,” said Nela Richardson, chief economist at ADP. “Overall, the figures for October paint a comprehensive picture of the labor market. And while the labor market has slowed, there is still enough to support strong consumer spending.”
The education and health services sector accounted for the largest employment gains last month, adding 45,000 new employees. But hiring was largely broad-based last month, with notable gains in other sectors, including leisure and hospitality, financial activities and trade, transport and utilities.
Elementary school teachers meet to speak with potential new hires during a hiring event for the Prince George’s County School District, August 2, 2023, at Dr. Henry A. Wise Jr. High School in Upper Marlboro, Maryland. ((Amanda Andrade-Rhoades/For The Washington Post via Getty Images) / Getty Images)
The gains helped offset losses in the natural resources and mining and professional and business services sectors.
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The data comes ahead of the release Friday morning of the Labor Department’s more closely watched October jobs report, which expected employers to have added 180,000 workers after a gain of 336,000 in September. The unemployment rate is expected to remain stable at 3.8%.
ADP figures can vary dramatically from official government figures and have historically been an unreliable indicator of the future.