Despite economists' predictions for a modest 85,000 increase in October non-farm payrolls, ADP reported this morning that private payrolls swelled by 106,000 for the month. The expectation was for private employment to grow by 55,000. The better-than-expected figure suggests that the official non-farm payrolls report to be released by the Labor Department this Friday could show an increase as high as 126,000.
Continuing subprime mortgage fallout led to job declines in both the construction and financial services sectors. Construction shed 16,000 jobs, marking the thirteenth such decline in 14 months. The sector has lost a total of 173,000 jobs since August 2006. The financial-services sector lost 1,000 jobs in October, marking the group's third consecutive monthly decline after 6 years of growth. The goods-producing sector gave up 28,000 jobs during October.
On the plus side, the services sector added 134,000 jobs.
The ADP report is considered to be a fairly accurate preview of the government's jobs report. Payroll provider ADP has tweaked its methodology for compiling the report and ramped up its sample size to improve accuracy. The key difference between the Labor Department and ADP reports is the omission of government jobs from ADP's figures.
In other economic news today, third-quarter U.S. compensation costs rose by 0.8%, lower than the 0.9% expected by economists. Wages and salaries grew by 0.8%, while benefits declined from 1.3% in the second quarter to 0.8%. The measure is closely watched by the Federal Reserve as an inflation indicator.