Private payrolls rise by 568,000 in September: ADP

Emily McCormick joins the Yahoo Finance panel to discuss the ADP reporting a gain of 568,000 jobs beating estimates that predicted a 430,000 increase. Watch as the panel discusses what this surprise could mean for the nation's economic recovery.

Video transcript

JULIE HYMAN: We have to get some macro data and news as well, and that is the ADP jobs report, which came out this morning. People see it as sort of a precursor to the monthly government jobs report, even though there's definitely not a one-to-one correlation, but there was a positive upside surprise here. Emily McCormick is here to walk us through the numbers. Good morning, Emily.

EMILY MCCORMICK: Good morning, Julie. And as you mentioned, we did get an upside surprise here in ADP's private payrolls report. That print painting a stronger than expected picture of the labor market heading into Friday's official government jobs report. Now, according to ADP, private payrolls grew by 568,000 in September.

That was good for a ninth straight monthly increase. And it also topped estimates compared to the 430,000 jobs consensus economists were looking for. And it also accelerated compared to August job gains, which were revised down by 34,000 to 340,000.

Now, the big contributor to this better than expected September report came in the services sector. So, an indication here that some of the pressures to the labor market that had been caused by the Delta variant are perhaps starting to retreat a bit. And we saw 466,000 net payrolls come back across the service providing sector, and within that leisure and hospitality industry, specifically brought back 226,000 jobs. So, again, boding well here for the restaurant and bar space and these other high contact areas of the economy.

Now, some other areas that saw some notable job gains. We saw education and health services, as well as professional and business services, each posting payroll gains above 60,000. And in the goods producing sector, we saw both construction and mining jobs rise by nearly 50,000 each.

Now, as you were alluding to, Julie, ADP's private payrolls report does set the tone for the Labor Department's official September jobs report on Friday. There are some differences in the survey methodology here. That means that it's not exactly a precise indicator as we've seen over the course of the pandemic, and 2021 specifically.

But if we take a look at the estimates for this Friday's report, consensus economists are still expecting to see an acceleration of job gains, looking for non-farm payroll growth of 488,000. And this ADP report just really reinforces optimism that the economy may not have a repeat of what we saw in August when job gains sharply missed expectations. But again, we will have to see what comes up as we get that Friday report, but at least in today's print, a beat to the upside on private payrolls, guys.

JULIE HYMAN: Thanks, Emily. Appreciate it. And yeah, definitely looking ahead to that Friday jobs report to see if there's confirmation of this trend. Thanks, Emily. You know, Brian Sozzi, this has been the jobs part of this, the jobs piece of this, has been something that is really confounded economists, not just the job growth itself, but also the wage growth, which has been more tepid than one might expect, given the anecdotal difficulty we've heard about employers finding people.

BRIAN SOZZI: Yeah, that white whale of a report, Julie, really-- and white whale, I mean, over a million jobs created in a month in the non-farm payrolls report, we have not gotten. And nothing in this ADP report suggests that that white whale of a report is coming this Friday.