Key Takeaways
- Private employers added 42,000 jobs in October, payroll provider ADP said, bouncing back after two straight months of losses.
- The job gains did little to change the picture painted by recent reports of a stalled-out job market.
- The lackluster job growth could encourage officials at the Fed to cut interest rates to prevent the slowdown from worsening.
With the government shutdown still delaying official data, private measures of the labor market show the job market is still drying up.
U.S. private employers added 42,000 jobs in October, payroll provider ADP said Wednesday. That was more than the 22,000 forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The growth was a rebound after a loss of 29,000 jobs in September, but was slow by historic standards, far below the 221,000 jobs added in October 2024, for instance.
What This Means For The Economy
The slow job growth reinforced the impression created by recent reports that the job market is in a low-fire, low-hire mode where employers are reluctant to expand their workforces but equally reluctant to let existing workers go.
Employers have pulled back on hiring in recent months due to uncertainty about trade policy amid President Donald Trump’s unpredictable campaign of raising tariffs on trading partners. Hiring may also be hindered by companies adopting artificial intelligence, the ripple effects of the government shutdown, and high borrowing costs from the Federal Reserve aimed at combating inflation.
Fed officials cut the central bank’s benchmark interest rate in September and October to boost the job market, and may do so again in December if more reports like Wednesday’s ADP figures come in. The Fed is tasked with a dual mandate from Congress to prevent high unemployment and keep inflation low, and Fed officials have become increasingly worried about the health of the labor market.
“You can blame the trade war, or a host of other factors—AI, earlier restrictive monetary policy, and the government shutdown—but it’s pretty clear that the labor market remains soft,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary. “This could be the key that unlocks another Fed rate cut in December.”