The Line: Private Payrolls Down 32,000 in September

It’s the first Friday of the month, which usually means we have jobs report from the BLS to dissect. As you know, the government is currently in a shutdown, which means there won’t be a BLS September jobs report for a while. So today, we use employment data from another three-letter group: ADP.

Private Payrolls Down 32,000 in September

First, I must apologize for not using ADP’s data more often in this column, as it has proven lately to be a reliable source of hiring data. Here’s some background information on their report:

• It is based on payroll data that covers more than 26 million U.S. employees.
• It does not include government workers.
• Their data goes back to 2010, and since their databases are updated continuously, the report is pretty much a real-time indicator of non-government employment.

Here’s the key findings from their September employment report:

• Private sector employment fell by 32,000 last month, the biggest declinesince March 2023.
• Economists were looking for a 45,000 increase in jobs, so this data is worse than expected.
• August hiring was revised down from a 54,000 gain to a 3,000 loss.
• Wages rose 4.5% over the past year for those who didn’t change jobs, and 6.6% for those who did.

ADP breaks down their data by industry and establishment size.

• Leisure and hospitality (19,000) posted the biggest loss of any industry, while gains were led by education and health services (+33,000).
• Firms with more than 500 employees added workers last month, while those under 500 reduced their workforce.

The takeaway here is that the labor market continues to slow down, although layoffs remain low for now. This is why many economists describe the current labor market as “low-hire, low-fire.” The good news is that wages are still rising faster than prices, and consumers continue to spend at a very strong pace.

The weak September employment data should keep the Fed on track to cut rates by 0.25% at each of their meetings in October and December. For those waiting for mortgage rates to fall below 6%, I wouldn’t hold my breath. We found out yesterday that the average 30-year mortgage rate rose for the second straight week to 6.34%. Yet another reminder that Fed rate cuts don’t always translate into lower mortgage rates.