The U.S. job market continues to register incremental progress, as the private sector added 110,000 jobs in October, ADP said.
October's job growth came exclusively from the services sector, said Gary C. Butler, Chief Executive Officer of ADP. Such a result explains the growth in professional and business services employment. It also reflects manufacturers' uncertainty around investment and hiring. Nevertheless, we are seeing a better balance between small- and medium-sized business job growth compared to previous months.
A Bloomberg survey had expected private employers to add 100,000 in October after adding a revised 116,000 in September, up from the initial September estimate of 91,000, and a revised 89,000 in August. The economy added 109,000 private sector jobs in July, 144,000 in June, and 35,000 in May.
Today's ADP National Employment Report suggests that employment continued to grow moderately in October, Joel Prakken, Chairman of Macroeconomic Advisers said, in a statement. The recent trend in private employment is probably below a pace consistent with a stable unemployment rate and reflects the sluggish pace of GDP growth exhibited earlier this year.
Separately, private placement firm Challenger, Gray & Christmas said layoff announcements by U.S. employers totaled 42,759 in October, down 63.1 percent from September's,115,730, Fox News reported Wednesday. That's the lowest lay-off total in four months, but it's still 11.6 percent higher than a year ago, in October 2010, when 37,986 cuts were announced.
For the first 10 months of 2011, job cuts totaled 521,823, up 16 percent from 449,258 for the first 10 months of 2010.
Returning to the October ADP report, the job gains were concentrated in the services sector and in small/medium-sized businesses. Small businesses added 58,000 jobs, medium business added 53,000, but large businesses shed 1,000.
The services sector added 114,000 jobs; the goods producing sector shed 4,000; financial services sector employment was flat, and construction sector employment declined by 1,000 jobs, and manufacturing declined by 8,000.
Economists monitor monthly job reports because job creation is positively correlated with corporate revenue and earning gains. And, in general, as corporate earnings go, so goes the U.S. stock market.
Labor Market/Economic Analysis: Like September, place October's private sector employment report in the category of a modest positive. The total was above the Bloomberg consensus estimate, and it's a level that indicates that, while hiring is not robust in the private sector, it has not collapsed, either. Most institutional investors will cheer October's report.
Equally significant: September's job total was revised up by 25,000 to 116,000 and if that upward revision pattern continues, it would be additional good news for corporate earnings and the U.S. stock market -- and good news for job seekers, obviously.
That said, investors should not read too much in to the ADP report. The ADP private survey is not as comprehensive as the U.S. Labor Department's non-farm monthly report, which includes both the public and private sectors -- October's report will be released Friday Nov. 4 at 8:30 a.m. EDT. Economists surveyed by Bloomberg News expect the U.S. economy to have added 90,000 jobs in October with the unemployment remaining flat at 9.1 percent.