Private sector employers added 230,000 jobs in September, according to payroll giant ADP, as hiring kept up its robust pace with the help of tax cuts.
Small businesses added 56,000 jobs in September, including 35,000 at businesses with between one and 19 employees, and 21,000 at businesses with between 20 and 49 employees. Midsized businesses with between 50 and 499 employees gained 99,000 employees. Large businesses added 75,000 employees, including 26,000 at companies with between 500 and 999 employees, and 49,000 at larger companies with 1,000 employees or more.
The service sector accounted for 184,000 of the jobs added in September, including 70,000 in professional and business services such as accounting and tax preparation. The goods-producing sector added 46,000 jobs. However, franchise jobs declined by 5,700.
“The labor market continues to impress,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “Both the goods and services sectors soared. The professional and business services industry and construction served as key engines of growth. They added almost half of all new jobs this month.”
Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly
“The job growth is broad based across nearly every industry: construction, manufacturing, financial services, professional services, leisure and hospitality, health care, education, pretty much across the board,” Zandi said during a conference call with reporters Wednesday. “The only soft spots are in brick and mortar retailing, and that’s gotten a little bit of life recently. Retail activity has been very strong, supported by the tax cuts. We’ve seen a little bit of strength there, but underlying job growth in the retail sector is soft because of the competition from online.”
He also sees some softness in mortgage banking, which in part is due to higher interest rates along with the new tax law. “The run-up in mortgage rates since the beginning of the year has sucked the life out of mortgage origination activity and refinancing activity, and the housing market in general has been going a bit sideways here as it adjusts to higher rates and the effects of the tax law,” said Zandi. “So we’re seeing some weakness in mortgage banking, which will continue for a bit. But outside of that a very strong, solid, consistent job growth.”
He is seeing wage growth in the 3 percent range as the unemployment rate continues to decline. “If the current pace of job growth is sustained, given all the fiscal stimulus in the next 12 to 18 months, we will see continued declines in unemployment and we’re likely going to be in the low 3’s on unemployment by the end of the decade, which is something we’ve never seen in peacetime,” said Zandi. “Only during World War II and the Korean War in the ’50s has unemployment been this low. Job openings are at record highs. Interestingly enough, even in the retail sector, we have a very high level of job openings. One interesting factoid, we have now for the first time in the available data more open job positions in the economy than there are unemployed, so that’s quite an achievement and hallmark.”
