Data from payroll processing company ADP indicates that U.S. companies have lost around 32,000 jobs in September, raising concerns about the labor market. ADP, which released its monthly private-sector employment report Wednesday, had been expected by Wall Street to show job growth of 45,000 for the month.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” ADP chief economist Nela Richardson said. This report comes after a more positive outcome was predicted by recent economic data about gross domestic product, and unemployment claims.
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This might be the only data on jobs available this month, since the Bureau of Labor Statistics (BLS) is closed and unable to publish the official government jobs due to the government shutdown. The U.S. government was shut down after the Trump administration and the Democrats were unable to reach an agreement regarding funding. If the two sides are not able to reach an agreement, the shutdown could continue indefinitely.
Companies with fewer than 50 employees saw the most losses. Firms employing 20-49 employees have lost 21,000 jobs and those employing fewer than 19 workers have lost 19,000 jobs. Losses were widespread across industries with some of the largest losses in professional and business services and leisure and hospitality. The bulk of hiring occurred at health care businesses, which have been the sole source of consistent employment growth this year.
However, this data also came with some caveats. Richardson said that preliminary “rebenchmarking” of the data was a significant factor behind the negative August revision and September’s estimated job losses. “We found that once we benchmarked that data, it actually shows a September slowdown that has been consistent with what we’ve been reporting all year,” Richardson told reporters Wednesday, noting the process resulted in a reduction of 43,000 jobs in September, compared to pre-benchmarked data.
“In fact, though the numbers changed, the story and the narrative and the trend remain the same: Hiring momentum has slowed from the beginning of the year through September,” she added.
ADP’s reports have been criticized previously by economists for having a poor track record in making short-term predictions, and they don’t necessarily correlate with the official monthly jobs numbers when they’re released days later. Nevertheless, they are still considered an indicator of the labor market’s trajectory.