WASHINGTON: US private payrolls recorded their biggest increase in seven months in September, boosted by hiring at construction sites and in the services sector, pointing to sustained labour market strength that should continue to underpin economic growth.
The economic outlook was bolstered by other data on Wednesday showing activity in the vast services sector accelerating to a 21-year high last month, with companies reporting strong order growth and hiring.
“The labour market continues to boil and is growing hotter,” said Chris Rupkey, chief economist at MUFG in New York. “More workers with money in hand to spend will lead to more consumer spending down the road.”
Private payrolls jumped by 230,000 jobs in September, the largest gain since February, the ADP National Employment Report showed on Wednesday, after increasing 168,000 in August. Last month’s rise beat economists’ expectations for a 185,000 gain. The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for September due on Friday.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 185,000 in September after surging 201,000 in August. The unemployment rate is forecast to fall one-tenth of a percentage point to 3.8 per cent, an 18-year low first hit in May.
While the ADP report has a poor record predicting the private-payrolls component of the government’s closely watched employment report, last month’s jump underscored robust labour market conditions that are likely keep the Federal Reserve on track to raise interest rates again in December.
The US central bank increased rates last week for the third time this year, noting that “the labour market has continued to strengthen” and “job gains have been strong, on average.”
The dollar firmed marginally against a basket of currencies and US Treasury yields rose. Stocks on Wall Street were trading higher, with the Dow Jones Industrial Average at an all-time high.
The ADP report showed construction payrolls rose by 34,000 jobs last month, accelerating from 3,000 in August. The services sector added 184,000 jobs in September, led by the professional and health services. Services sector employment increased by 145,000 jobs in August.
Separately, the Institute for Supply Management (ISM) said on Wednesday its non-manufacturing activity index jumped 3.1 points to 61.6 last month, the highest reading since August 1997. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of US economic activity.
— Reuters
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