Two days before the U.S. government releases its official estimate of September’s job growth and employment, payroll processor ADP says the economy added 162,000 private sector non-farm jobs last month, most of them coming from businesses with fewer than 500 workers.
Economists in surveys by various business news services, had , on average, expected the ADP number to be closer to 150,000. The report also adjusted down its initial count for August to 189,000, a reduction of 12,000, and cut July’s numbers by 12,000 to 156,000.
Although the count rarely jibes with the report from the Bureau of Labor Statistics, ADP’s National Employment Report is looked to by economists and the financial markets as an early indicator of what the official numbers might show. Economists are, on average, predicting September produced a net jobs increase in the range of 110,000 to 120,000. The BLS will issue its preliminary numbers Friday.
Some, however, say the actual number of new jobs may be closer to the ADP counts. TrimTabs Investment Research issued its own jobs estimate this morning, putting the number of new private-sector jobs created in September at 210,000.
In its research note, Trim Tabs says:
… the Bureau of Labor Statistics’ (BLS) is missing the current acceleration in job growth. In August, the BLS reported job growth of only 96,000 new jobs, nearly half of the job growth TrimTabs reported. TrimTabs reports that the BLS survey typically captures employment growth more effectively in government and large corporations while nearly 84% of the recent employment growth is occurring in small and medium sized businesses.”
ADP, and its data analysis partner, Macroeconomic Advisers, said businesses with fewer than 50 employees were responsible for creating 81,000 new jobs. Those with 50 to 499 added 64,000 workers, while larger firms created 17,000 new jobs. Most were in the service sector, which accounted for 144,000 of the new positions; the balance came in the goods-producing sector. Manufacturing added 4,000 new jobs.
“Small and medium-size firms continue to be the driving force behind job growth,” Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, said in a research note. “Hiring at startup and small firms will continue to be the key to the sustainability of the labor market recovery going forward.”
Because of how the BLS, a part of the Department of Labor, compiles its data — based on separate surveys of employers and individuals — it’s been criticized for underestimating jobs created by small businesses and especially by startups. Annually, the bureau adjusts its counts, based on tax records. A preliminary adjustment report issued last week says there was a 386,000 undercount last year.
Other reports which have begun trickling out, point to improvements in the economy and, especially, in consumer confidence last month.
The Conference Board, a non-profit business research organization said its Consumer Confidence Index rose to 70.3, a jump of nine points from August. It’s the highest reading since February. The Thomson Reuters/University of Michigan index of consumer sentiment rose to 78.3 from 74.3 in August, the highest level since May.
Monday, the Institute for Supply Management reported that its manufacturing index rose to 51.5 percent in September, from August’s 49.6 percent, the first increase in four months, while the New Orders Index also rose. It increased 5.2 percent in September, its first expansion in four months. And the employment index also rose.
This morning, the Institute said its Non-Manufacturing Index also increased last month, from 53.7 percent in August to 55.1 percent. “The Employment Index decreased by 2.7 percentage points to 51.1 percent, indicating growth in employment for the second consecutive month but at a slower rate,” the Institute reported.
Tomorrow, The Society for Human Resource Management releases its LINE report, which predicts recruiting conditions for the month ahead.