By Nathalie Voit
Private-sector hiring picked up in September in what turned out to be a better showing than many economists expected.
According to payroll giant ADP’s National Employment Report, private payrolls in September rose by 568,000 from August. The hiring was led by large companies, which added 390,000 jobs, including 36,000 in businesses with 50-999 employees and an impressive 354,000 in businesses with 1,000 employees or more. Medium-sized businesses with teams of 50 to 499 followed suit, adding 115,000 employees to their payroll. Small businesses with 1-49 employees saw gains of 63,000.
“The labor market recovery continues to make progress,” said chief economist of ADP Nela Richardson. “Leisure and hospitality remains one of the biggest beneficiaries to the recovery, yet hiring is still heavily impacted by the trajectory of the pandemic, especially for small firms.”
The figures are a sign of progress from the lagging jobs report in August. According to ADP, the August total jobs report was a revised 340,000, down from 374,000. Analysts surveyed by Refintiiv predicted gains of only 428,000 for this month, according to Fox News.
In contrast to ADP’s official estimates of 568,000, nonfarm payrolls rose by just 194,000, according to Labor Department data released Friday.
The latest numbers are a worrying departure from the original estimates, revealing a much-weaker-than-expected job growth pace for the month of September.
The numbers were broadly influenced by a sharp decline in government jobs, which saw government payrolls decrease by 123,000.
The service sector accounted for the majority of the hiring, filling 466,000 positions. Within the service industry, leisure and hospitality saw the largest gains, topping at 226,000. Hiring in the education and health services (66,000), professional and business services (61,000), and trade, transportation, and utilities (54,000) followed close behind.
The goods-producing sector also added 102,000 new workers last month, filling jobs in natural resources and mining (7,000), construction (46,000), and manufacturing (49,000).
Employment in the franchise industry came in last, adding 25,800 new jobs.
Notably, employment prospects for large-sized companies were brighter than for small and medium-sized businesses. Unlike their smaller counterparts, large organizations have the available capital to meet workers’ demands for higher wages. Meanwhile, the economic recovery particularly has been difficult for mom-and-pop stores that lack the financial means to attract and retain talent.
“That hypergrowth in the hiring rate means that workers have the bargaining power to hold out for better wages before returning to work or to leave their current jobs for higher-paying opportunities. That’s especially tough for small businesses, who likely don’t have the same resources as their bigger competitors,” Laura Wronski, research science manager at Momentive, said.
The improvement in hiring comes as the $300 per week in extra unemployment benefits expired in early September, Fox News reported.
