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Private job growth down this month in wake of U.S. shutdown, ADP says

October 30, 2013|By Jim Puzzanghera
  • A hotel manager, left, interviews with a job seeker during a job fair at a hotel in Louisville, Ky.
A hotel manager, left, interviews with a job seeker during a job fair at a… (Luke Sharett / Bloomberg )

WASHINGTON -- Business hiring slowed this month with the private sector adding just 130,000 net new jobs as the partial government shutdown hit an already weakening labor market, payroll processor ADP said Wednesday.

The figure was below the 150,000 average monthly job growth in the sector over the previous year as the hiring in the service sector fell off in October, said Mark Zandi, chief economist at Moody's Analytics, which assists ADP in the monthly report.

"The government shutdown and debt limit brinkmanship hurt the already softening job market in October," Zandi said. Firms that do government contracting were affected by the 16-day government shutdown and the fiscal impasse probably caused small companies to hold off on hiring, he said.

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The 130,000 private-sector jobs added in October marked the smallest gain since April, ADP said. Economists had projected ADP's numbers would show the private sector added 138,000 jobs last month.

Combined with a significant downward revision of September's figure to 145,000, the latest ADP data do not bode well for the government's October job report, due next week, and add to the likelihood that the Federal Reserve will hold steady on its stimulus efforts, Zandi said.

Fed policymakers are scheduled to issue a statement Wednesday at the conclusion of their two-day meeting. The weakening labor market and another looming fight early next year over federal government funding and the debt limit, make it unlikely the Fed will taper its $85-billion bond-buying program until March, Zandi said.

"I don't think the Federal Reserve board members would feel very comfortable until the job growth is closer to 200,000" a month, Zandi said.

He added that the labor market, which softened over the summer because of this year's tax increases and automatic federal spending cuts, was "a long way" from that level right now.

Zandi estimates that the Labor Department will report next week the economy added just 100,000 net new jobs in October. The report's release was delayed a week by the shutdown.

ADP found the service sector added 107,000 jobs in October, down from 130,000 the previous month. Financial firms cut jobs by 5,000.

Employment at goods-producing companies was up 24,000 in October compared with an increase of 16,000 the previous month. The construction industry added 14,000 jobs, down from 16,000 in September.


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