Private payrolls increased 166,000 last month on a seasonally adjusted basis, according to today’s release of the ADP Employment Report. That’s a bit more than August’s 159,000 advance, although the pace remains sluggish compared with recent history in terms of monthly comparisons. On a brighter note, the year-over-year change in private payrolls turned higher again in September, rising 1.88% last month vs. the year-earlier level. That's the fifth straight month of improvement for the annual rate of increase, according to ADP numbers. As a result, last month's year-over-year gain is the highest in more than a year. Overall, the ADP data implies that Friday’s official payrolls report from the government would also dispatch slightly better numbers from the previous month... if the report was released. Thanks to the government shutdown, however, Friday’s Labor Department update looks set to remain a mystery until further notice.
"The job market appears to have softened in recent months," says Mark Zandi, chief economist of Moody’s Analytics, which helps prepare the ADP report. In a press release (pdf) issued with today’s update, he explains that "fiscal austerity has begun to take a toll on job creation. The run-up in interest rates may also be doing some damage to jobs in the financial services industry. While job growth has slowed, there remains a general resilience in the market. Job creation continues to be consistent with a slowly declining unemployment rate."
Nonetheless, there’s a bit more uncertainty in the air about the trend in payrolls, and the fiscal follies aren't helping. But the fact that the year-over-year change continues to improve, in both the ADP data and the government’s numbers (at least through August), suggests that there’s more strength in the trend than recent monthly comparisons indicate. Still, it would be nice to see how the Labor Department’s estimate for September compares in the cause of tapping into deeper perspective. But such enlightenment on macro matters, along with political sanity in Washington, is on hiatus for now.
In any case, The Capital Spectator’s regular monthly econometric modeling of the government’s September payrolls data will be published tomorrow in search of additional context on what might have been reported on Friday if Congress still had the capacity for making responsible fiscal decisions.