ADP finds private sector added 135,000 jobs in September as hurricanes hit south

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The private sector added 135,000 jobs in September, according to the payroll giant ADP, as the recent hurricanes put a dent in job growth.

Small businesses felt the biggest impact, losing 7,000 losses. The loss of 11,000 jobs at businesses with between one and 19 employees was offset somewhat by the 4,000 jobs gained at businesses with between 20 and 49 employees.

“In September, small businesses experienced a dip in hiring,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “This is in part due to Hurricanes Harvey and Irma, which significantly impacted smaller retailers. In addition, the continued slowdown we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent.”

Medium businesses with between 50 and 499 employees added 63,000 employees. Large businesses added 79,000 employees, including 16,000 at companies with between 500 and 999 employees and 63,000 at businesses with 1,000 employees or more.

The service sector led the way with gains of 88,000 jobs, including 51,000 in professional and business services, which include accounting, tax preparation and other professional services. The goods-producing sector added 48,000 jobs.

“Today’s numbers were affected by the storms, Hurricanes Harvey and Irma,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment with ADP, during a conference call with reporters Wednesday. “The top-line number came in around 135,000 jobs. My sense is that the storms cut employment by 50 to 60,000 jobs.”

If not for the hurricanes, he estimated the jobs would have been around 180,000 or 190,000, consistent with the roughly 200,000 jobs per month added in recent years after the economy recovered from the 2008-2009 recession. The most significant area of impact was in the retail sector. “Brick and mortar retailers have been struggling with competition from online retailers, but I think this decline was due in large part to the effect of the storms,” said Zandi. “The smaller mom and pop retailers had little option but to shut down and regroup after the storms in Texas and Florida.”

He anticipates that when the U.S. Bureau of Labor Statistics releases the government’s official job numbers Friday for the private and public sectors, the numbers will be even “softer,” around 100,000. However, he predicted the BLS would later revise the September figures upward a bit in subsequent reports as more employers are able to report their numbers.

Other parts of the country appear to be faring well in terms of job growth. “Abstracting from the impact of the storms, which is temporary, the labor market is fine,” said Zandi.

Also on the positive side, he anticipates that hurricane recovery efforts will aid the construction and automotive industries.

“We should see stronger gains in construction in the coming months as recovery kicks into gear in Texas and Florida,” said Zandi. “We saw that in vehicle sales last month. Folks who lost cars, particularly in Texas, are now buying cars. There’s been a big surge in vehicle sales.”

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Payroll Disaster recovery Small business ADP Moody's Analytics