By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private payrolls increased more than expected in September, buoyed by hiring in the construction, leisure, and hospitality industries, strengthening evidence of a stable labor market.

The release of the ADP National Employment Report on Wednesday followed government data indicating there were 1.13 job openings for every unemployed person in August, compared to 1.08 in July.

Private payrolls rose by 143,000 jobs in September after an upward revision of 103,000 in August, according to the report. Economists surveyed by Reuters predicted a 120,000 increase in private employment after a revised gain of 99,000 in August.

• Sector Highlights:
  • Construction employment increased by 26,000 jobs.
  • The leisure and hospitality sector added 34,000 jobs.
  • Notable gains also occurred in education, health services, and professional and business services.
  • Modest payroll increases were seen in financial activities and manufacturing.

The information sector was the only one to report job losses, shedding 10,000 positions. Last month’s job increases were noted across medium-sized and large businesses, while small businesses reduced employment by 8,000 positions. Wages for workers remaining in their jobs rose 4.7% year-over-year after a 4.8% increase in August. The wage growth for those changing jobs slowed to 6.6% from 7.3%.

The Federal Reserve recently cut its benchmark interest rate by a significant 50 basis points to the 4.75%-5.00% range, the first reduction since 2020, highlighting rising concerns about the labor market.

The U.S. central bank is anticipated to further lower rates in November and December.

Impact of Strikes

The ADP report, developed with the Stanford Digital Economy Lab, was released ahead of the more comprehensive Labor Department employment report on Friday. However, there is little correlation between the ADP and BLS reports, as ADP estimates often understate private payroll growth.

Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, cautioned against relying heavily on the ADP’s estimates, noting it has been an unreliable guide since its methodology changed two years ago.

The ongoing labor supply surge, driven by immigration, is attributed to sluggish hiring that is slowing the labor market. The jobs report is expected to show private payrolls increased by 125,000 in September, with nonfarm payrolls forecast to rise by 140,000. The unemployment rate is forecast to stay unchanged at 4.2%, up from 3.4% in April 2023.

The outlook for the labor market in October appears uncertain due to a strike by about 30,000 machinists at Boeing, along with dockworkers on the U.S. East Coast and Gulf Coast who walked off the job. If these strikes persist past mid-October, they could significantly impact October’s payroll figures.

Nancy Vanden Houten, lead U.S. economist at Oxford Economics, noted, “If the Boeing strike and the port strike last through the second week of October, job growth for October could be negative, given the number of workers on strike and the anticipated layoffs of non-union workers due to the strikes.”