Private sector employers added 147,000 jobs in October, according to the latest monthly jobs report from payroll giant ADP, the last before the election.
Small businesses added 34,000 jobs in October, including 14,000 in business with between one and 19 employees and 20,000 in businesses with between 20 and 49 employees. Midsize businesses with between 50 and 499 employees gained 48,000 jobs. Large businesses added 64,000 jobs, including 2,000 at companies with between 500 and 999 employees and 63,000 at companies with 1,000 employees or more.
The service sector added 165,000 jobs, including 69,000 in the professional and business services sector, which includes accounting, tax and other types of services. ADP has revamped its report this month to break out the numbers more and better align the report with the U.S. Bureau of Labor Statistics’ monthly job numbers. Of the 69,000 jobs added in professional and business services, 28,000 were in professional and technical services, 6,000 in management of companies and enterprises, and 36,000 in administrative and support services.
The financial activities sector added 18,000 jobs in October, while the information sector added 3,000 jobs. The combined trade, transportation and utilities sector gained 17,000 jobs in October. Franchise businesses added 25,000 jobs.
Health care and social assistance services added 34,000 jobs, but education services subtracted 12,000 jobs, for a total of 22,000 jobs added in education and health services. The leisure and hospitality sector added 38,000 jobs, but 2,000 jobs were lost in the “other services” category.
In contrast, the goods-producing sector lost 18,000 jobs in October. The biggest losses were in the construction industry, which subtracted 15,000 jobs. The natural resources and mining industry lost 2,000 jobs, while the manufacturing sector lost 1,000.
“Job growth has slowed a bit over the past year,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment report with ADP. “About a year ago, job growth was closer to 200K per month, so we have seen some slowing. But 150K is still a very good, solid number, well above the rate of job growth needed to absorb the growth in the working age population. The labor market, which is closing in on full employment, continues.”
He believes the slowdown in job growth seen over the past year is due to some sectors of the economy that are still struggling, particularly the energy sector with low oil and natural gas prices. That explains job losses in the resources and mining sector. There has also been some weakness in the construction trade, which had been adding significant jobs last year and the year before.
“I think the biggest reason for that slowdown is a pretty sharp weakening in public construction in recent months, and I think that’s showing up in the construction trade data,” Zandi said during a conference call with reporters Wednesday. “The residential construction sector, the housing sector, is fine.”
Another reason for the slowdown is that the job market is getting tight. “Open positions are going begging,” said Zandi. “According to the Bureau of Labor Statistics, there is close to a record number of open job positions in the economy in most sectors, energy being the exception. I think businesses are having a hard time filling those positions, and thus as the economy gets closer and closer to full employment, the more difficulty businesses are having finding qualified workers.”
“Job growth appears to be shifting from small to large companies due to the lessening impact the global economic environment had on large companies earlier in the year,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute, in a statement. “This is also true because large companies often have the resources to attract workers with better pay and benefit packages.”
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