ADP: US private employers added 230,000 jobs in October (+video)
US companies added 230,000 jobs in October, the most in four months and a sign that businesses are still willing to hire despite signs of slowing growth overseas, according to payroll processor ADP. September payroll gains from ADP also were revised higher, to 225,000 jobs.
Washington — US companies added 230,000 jobs in October, the most in four months and a sign that businesses are still willing to hire despite signs of slowing growth overseas.
Payroll processer ADP said Wednesday that the job gains were slightly ahead of the 225,000 added in September, which was revised up from an initial estimate of 213,000 and the ADP report's biggest total since June. Job gains above 200,000 are usually enough to lower the unemployment rate.
September payroll gains were revised higher to 225,000, from an initially reported 213,000. Goods-producing payrolls increased by 48,000), with 15,000 jobs coming from manufacturing. Service-providing employers added 18,000 workers to payrolls last month.
"The frequent and large revisions to the ADP employment report limit its usefulness in forecasting," Barclays Research economist Jesse Hurwitz wrote in an e-mailed statement. "However, we view the October report as largely consistent with our outlook for nonfarm payroll gains of 225k in Friday’s employment report from the Labor Department."
The figures indicate that the government's jobs report on Friday could show a healthy pace of hiring. The ADP numbers cover only private businesses and sometimes diverge from the government's more comprehensive report.
Economists forecast that the government's report will show that all employers, including government agencies, also added 230,000 jobs in October, according to a survey by FactSet.
The job gains in the ADP report were broad-based: Construction firms added a solid 28,000 jobs last month, while manufacturing gained 15,000 positions. Professional and business services, which include mostly higher-paying positions such as accountants and engineers, gained 53,000.
Hiring has been strong this year, despite some hiccups in economic growth. Employers have added an average of 227,000 jobs a month in 2014, which puts this year on pace to be the strongest year for job creation since 1999.
Other recent reports suggest that Friday's government jobs report could be a healthy one. Manufacturers hired at a faster pace in October than in the previous month, according to a survey by the Institute for Supply Management, a trade group.
And applications for unemployment benefits have fallen to 14-year lows, evidence that employers are cutting very few jobs.
Due in part to the strong Labor report, US stock index futures pointed to a higher open on Wednesday after the Republican Party took control of the Senate in the midterm elections, as expected, and following a report on the labor market that was stronger than expected.
The beaten-down energy sector will be in focus as the Republican majority could lead to new legislative measures that directly affect the group, including approval of oil and gas pipelines and reforms for crude and natural gas export laws.
The group has lagged of late, suffering massive losses as crude oil prices recently fell to a three-year low. The S&P energy index is the only one of the ten primary S&P 500 sectors to be negative for the year.
Futures rose on relief that the election results were clear, with the upcoming Senate majority party not in doubt. Investors had been concerned that some close races would be forced into run-offs, an outcome that could have led to weeks of delay in knowing who would control Congress's upper chamber.
Midterm elections historically correspond with strong equity returns. According to the Stock Trader's Almanac, the average gain for the S&P 500 since 1949 during the fourth quarter of a midterm election is 8 percent. The following first-quarter during the midterm portion of the election cycle is also strong, resulting in a two-quarter average gain of 16 percent, the best of the election cycle.