US private payrolls, wage gains slowing – ADP

WASHINGTON (Reuters) – U.S. private payrolls increased less than expected in October and wage growth moderated, according to a report on Wednesday.

Private payrolls rose by 113,000 jobs last month after gaining 89,000 in September, the ADP National Employment report showed. Economists polled by Reuters had forecast private payrolls rising 150,000.

Though the labor market is cooling in response to the Federal Reserve’s massive interest rate hikes, the ADP report likely overstates the pace of slowdown. Labor market conditions remain tight and continue to underpin the overall economy. A survey from the Conference Board on Tuesday showed consumers’ views of the labor market upbeat in October.

Fed officials were due to conclude their two-day policy meeting on Wednesday. The U.S. central bank is expected to leave interest rates unchanged but maintain its hawkish bias as a recent spike in U.S. Treasury yields and stock market sell-off have tightened financial conditions.

Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.

The service-providing sector added 107,000 jobs, while employment in the goods-producing sector increased 6,000.

Workers remaining at their jobs saw a 5.7% increase in annual wages, the smallest rise since October 2021. That was down from an increase of 5.9% in September. Those changing jobs saw their annual pay rising 8.4%, the smallest increase since July 2021. That compared to 8.8% in September.

The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the release on Friday of the Labor Department’s more comprehensive and closely watched employment report for October.

The ADP report has not been a reliable gauge in trying to predict the private payrolls count in the employment report.

According to a Reuters survey of economists, the Labor Department’s Bureau of Labor Statistics is expected to report that private payrolls increased by 158,000 jobs in October after rising by 263,000 in September. Some of the anticipated slowdown will likely reflect strikes by the United Auto Workers (UAW) union against Detroit’s Big Three car makers, which is expected to undercut manufacturing payrolls.

The government reported last week that there were at least 30,000 UAW members on strike during the period it surveyed business establishments for October’s employment report.

The Reuters poll estimated that nonfarm payrolls increased by 180,000 jobs October, slowing down from September’s robust 336,000 count.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)