US private-sector businesses added 571,000 jobs in October, according to ADP’s monthly jobs report.
The print beat the 400,000-payroll forecast and showed hiring rebounding from September.
It’s good news for Biden on the economy, but comes just one day after a stunning loss by a Democrat in Virginia’s gubernatorial election.
The US private sector added more jobs than expected in October, signaling much stronger job growth after months of dismal recovery and potentially good news on the economy for President Joe Biden. But is it too late?
Private payrolls rose by 571,000 last month, ADP said in its monthly employment report. That landed well above the 400,000-payroll estimate from economists surveyed by Bloomberg. It marks the strongest one-month gain since June.
ADP’s September hiring print was revised to 523,000 from 568,000.
October saw dueling trends shape the labor market’s recovery. Virus cases continued to slide through the month, bringing daily case counts to the lowest level since late July. After months of surging infections, the Delta wave is squarely on the decline.
Yet dire supply-chain bottlenecks weighed on the recovery. Shipping delays and shortages left businesses scrambling to match Americans’ massive spending. Still, Americans can look forward to stronger job creation so long as the virus situation keeps improving, Mark Zandi, chief economist at Moody’s Analytics, said.
“The job market is revving back up as the Delta wave of the pandemic winds down,” he said in the report. “As long as the pandemic remains contained, more big job gains are likely in coming months.”
The report gives the White House something to celebrate as Tuesday election results disappoint the Democratic Party. In a sign that voters are displeased with the party in unified control of Washington and its handling of the economy, on Tuesday Republican Glenn Youngkin defeated Terry McAuliffe in what has recently been a safe Democratic seat. A too-close-to-call race for the New Jersey governorship also shocked the party. Overall, it was an ominous night coming a year before the midterm elections, during which the party in power usually loses seats – and Democrats are barely in power, with razor-thin majorities in both the House and Senate.
The stronger job gains follow two months of disappointing jobs reports. The US added just 194,000 nonfarm payrolls in September, badly missing expectations of a 500,000-payroll hiring boom. The August gain of 366,000 also fell below estimates. The two months saw the bulk of the Delta wave, to which economists broadly attributed the weak hiring. The Wednesday print suggests that the US economy could soon return to the strong hiring seen through the summer.
Still, economists are hopeful. The median forecast for Friday’s report sees the US adding 450,000 nonfarm payrolls in October, more than double the September gain.
Service businesses hire up as the Delta wave subsides
Takeaways from the report’s finer details show service sectors still driving the bulk of the labor market’s rebound. The industry added 458,000 payrolls compared to the goods-producing firms’ gains of 113,000 jobs.
Leisure and hospitality businesses took on 185,000 new jobs, while the professional and business services sector followed with a gain of 88,000 payrolls, according to the report. Service businesses were the hardest hit by lockdowns and the Delta wave. With case counts tumbling, the latest ADP data suggests the firms’ recoveries will pick up speed through the fall.
Within the goods-producing sector, construction saw the largest increase with a 54,000-payroll gain. The increase is promising for the US housing market. Homebuilders struggled to rehire through much of the recovery, and the worker shortage left firms less equipped to shore up home supply. The construction sector’s October gain is the largest since September 2020, hinting firms could soon chip away at the country’s housing shortage.
To be sure, the labor market remains far from fully healed. Nearly 8 million Americans remained unemployed at the end of September, according to the Bureau of Labor Statistics. Yet the Biden administration expects major progress in 2022. The US is still on track to reach full employment “next year,” even after two disappointing jobs reports, Treasury Secretary Janet Yellen said in October.
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