U.S. businesses continued hiring at a solid pace in September, according to a private survey. The result marks the the sixth straight month of solid gains.
Payroll processer ADP says private employers added 213,000 jobs last month, up slightly from 202,000 in August. Job gains above 200,000 are usually enough to lower the unemployment rate.
The figures suggest the government's jobs report on Friday could show a rebound in hiring. The government said employers added only 142,000 jobs in August. But the ADP numbers cover only private businesses and sometimes diverge from the government's more comprehensive report. ADP's August figure was much higher than the government's.
Economists surveyed by FactSet forecast that the government's report will show 215,000 jobs were added in September, while the unemployment rate remained 6.1 percent.
The ADP figures are a precursor to the official government data, which comes out on the first Friday of every month. But the surveys are conducted differently, and therefore can yield very different results.
Still, economists were hopeful that the solid ADP report could portend good things. "Market expectations for the September ADP report were centered on +205,000 (based on median forecasts of a 217,000 gain in total and a 210,000 increase in private nonfarm payrolls), so the reported ADP tally was basically in line with expectations," Joshua Shaprio, an economist with MFR, Inc., writes via e-mailed analysis. "While ADP has an inconsistent record in terms of accuracy versus the initially-published government data, it nonetheless often provides a useful guideline to the official report. Given that the ADP result was very close to the prevailing median forecast, it will likely have little or no effect on the survey medians for Friday’s payroll numbers. Pre-ADP, our own estimates were +210,000 for total payrolls and +200,000 for private payrolls. We are not changing these forecasts."
"While the frequent revisions to the ADP employment report limit its usefulness for forecasting purposes, the strong September report is broadly consistent with our forecast for an increase of 250,000 jobs in Friday’s nonfarm payroll report," Barclays Research economist Jesse Hurwitz wrote in an e-mailed release.
The solid ADP reports was not enough to buoy stock markets around the world, which drifted lower Wednesday ahead of a raft of major economic news events that could make for a volatile few days.
In Europe, Germany's DAX fell 0.5 percent to 9,426 while the CAC-40 in France fell 0.9 percent to 4,378. The FTSE 100 of leading British shares was 0.8 percent lower at 6,567. Wall Street looked set modest declines at the open, with both Dow futures and the broader S&P 500 futures down 0.2 percent.
Ahead of Friday's U.S. nonfarm payrolls report for September which often sets the market tone for a week or two after its release, traders have a raft of news to digest. On Wednesday, private payrolls firm ADP found 213,000 jobs were generated during September. The increase was largely in line with expectations and cemented views about Friday's official data. The ADP report also helped ease concerns over a surprisingly weak consumer confidence number from the Conference Board on Tuesday. Later, the Institute for Supply Management publishes its closely watched manufacturing reported.
"While no one report or indicator is perfect, the fact that ADP was not similarly weak is a positive development and should leave estimates roughly unchanged for monthly payroll gains," said Dan Greenhaus, chief strategist at BTIG.