ADP Sees 110,000 New Jobs in Private Sector in October

Private sector employers added 110,000 new jobs to their payrolls in October, mainly in the service sector, according to the monthly employment report from payroll giant ADP.

Small businesses with less than 50 employees added 58,000 jobs, while midsized businesses with between 50 and 499 employees added 53,000 jobs. However, ADP saw a decline of 1,000 jobs in large businesses with 500 employees or more. ADP also revised upward its figures for September from a gain of 91,000 jobs to an increase of 116,000.

However, the job gains probably will not be enough to move the marker very much when the U.S. Bureau of Labor Statistics reports its numbers on Friday for both private and public sector employment.

“It should be enough at best to prevent the unemployment rate from declining, but not enough to characterize the labor market as turning robust,” said Joel Prakken, chairman of Macroeconomic Advisers, which compiles the national employment report with ADP. “If the state and local government sector continues to shed jobs as it has in recent months, I would expect the number to be below 110,000 on Friday.”

One of the sore spots has been with goods-producing employers. ADP found that the goods-producing sector shed 4,000 jobs last month, while the service-providing sector added 114,000 jobs. The manufacturing industry alone lost 8,000 jobs, unlike the early months of the recovery when it added jobs. The finance industry gained 1,000 jobs, but the construction industry lost an equal number. Among small businesses, ADP said there were no jobs created in the goods-producing sector in October. Job gains again came in the service sector, which added all 58,000 jobs reported for last month among small businesses.

While gains in the goods-producing sector would help spur the recovery, the service sector has proven to be the key component in the U.S. economy in recent years. “Since services now account for much of the economy, the gains need to be in the service-providing economy to have a robust recovery,” said Prakken.

Fourth-quarter growth in gross domestic product is forecast to be between 2.5 to 3 percent, probably closer to 3 percent, he predicted. He does not expect much of a decrease in unemployment until the second half of next year, especially given the low prospects for passage of the jobs bill in Congress. Prakken predicted that a return to full employment probably will not occur until 2015 or 2016.

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