Still no signs of recession - Inside the October ADP Jobs Report
Bottom Line: Jobs reports are always among the most anticipated economic reports we receive. They’ve taken on added significance in recent months with the increased drumbeat of recession concerns being voiced by people alleging that trade policy has led us into a recession. Well, there’s still no evidence of one. In fact, the ADP Report showed that we produced 25,000 more private sector jobs than expected in October. 125,000 private sector jobs were added during the month, which isn’t great but against the backdrop of near record low unemployment and the GM strike (which temporarily impacted the jobs report).
As for where the jobs were added:
- Small businesses: +17,000
- Medium sized businesses: +64,000
- Large businesses: +44,000
The growth from mid-sized and large businesses is solid, especially given the already exceptionally low unemployment rate. Obviously, we’d like to higher small business growth. We’ve seen small businesses lag in job growth most of the past couple of years as small companies have struggled to compete with larger companies for talent in the tight labor market. Is this more of the same or a sign of a slowing down in the economy? We’ll know more next month. In the meantime – it's a given that we didn’t start the 4th quarter with negative economic growth. Small businesses wouldn’t be adding even 17k employees in a month if the economy were heading south.
The top industries for hiring were...
- #1 Education and healthcare
- #2 Trade, transportation and utilities
- #3 Leisure and hospitality
A minor fly in the ointment here is construction and manufacturing jobs. Each dropped by 4,000 over the past month. Again, the GM strike could have factored into this – so it’s hard to know what’s real and what was temporary – but it’s worth watching in next month’s report.