US labour market took an unexpected hit in September as private-sector businesses lost 32,000 jobs. This was worse than the 51,000 job increase that economists had predicted.
The drop in private payrolls is raising alarm bells as policymakers, investors, and economists try to gauge the state of the economy amid a government shutdown.
With the Bureau of Labor Statistics (BLS) unlikely to release its regular monthly jobs report due to the shutdown, the ADP report has become a key piece of information for tracking the labour market.
August private jobs data
August’s job numbers were also revised downward significantly. Initially, 54,000 jobs were reported to have been added that month, but that figure was corrected to a loss of 3,000.
Small businesses were the hardest hit in September, and the losses were spread across many industries. Professional and business services sector, along with leisure and hospitality, saw some of the largest declines. Healthcare, however, was one of the few sectors that saw continued job growth.
Slower pay growth
Along with the job losses, wage growth also showed signs of slowing. Pay increases for workers who changed jobs dropped to 6.6% in September, down from 7.1% in August.
For those staying in their current positions, pay growth remained steady.
Meanwhile, the unemployment rate rose to 4.3% in August, the highest it has been since October 2021, reflecting a broader trend of stagnation in the job market.
Although job openings increased slightly, the pace of hiring slowed, and fewer people quit their jobs. This indicates that both workers and employers are holding back in the face of ongoing economic uncertainty.