Private sector employment grew by 113,000 jobs last month, while annual pay increased 5.7% year over year, payroll provider ADP reported Wednesday, in another sign of continuing strength in the economy despite interest hikes and inflation.
Small businesses added 19,000 jobs in October, according to the ADP National Employment Report, including 21 at businesses with between one and 19 employees, offset by a loss of 2,000 jobs at companies with between 20 and 39 employees. Medium-size establishments added 78,000 employees, including 96,000 at businesses with between 50 and 249 employees, but that was offset by a loss of 18,000 jobs at companies with between 250 and 499 employees. Large businesses with 500 employees or more added 18,000 jobs in October.
The goods-producing sector added 6,000 jobs while the service-providing sector added 107,000 jobs last month, including 21,000 in financial activities. However, there was a loss of 10,000 jobs in the professional and business services sector, which includes accounting, tax preparation and auditing, as well as other types of roles.
“We can break them down a little bit further into office support and then also more higher-skilled, higher-paying jobs in professional and business service as well,” said ADP chief economist Nela Richardson. “We’ve seen office support jobs kind of struggle a little bit with the hybrid work environment or the remote work environment that’s rebounding as more employers are requiring workers to come back to the office at least part of the week. We’re also seeing a bit of a struggle at those higher-paying professional business services jobs. We’re seeing pay growth actually slow quite a bit, especially for new hires. There have been signs that large firms, which tend to dominate this particular industry, are not hiring with the same intensity that they did last year. You can see that with the over-500 hiring slowing down from the heat that we saw toward the end of 2021 and 2022. I think the big picture for professional and business services is that there’s a bit of weakness there in terms of adding new jobs, and I think that’s driven by larger firms that are really kind of tweaking their hiring from a year ago.”
Pay growth slowed to a two-year low in October, with people who stayed at their jobs reporting a 5.7% year-over-year pay increase in October, but that was the slowest pace of growth since October 2021. Pay growth for people who changed jobs was 8.4%, but that was the smallest increase since July 2021. For professional and business services, the median change in annual pay for those who stayed in their jobs was 5.6%. For the information technology sector, the median change in annual pay for those who stayed in their jobs rate was 5.1%, and for financial activities like banking it was 6.1%.
“For what are traditionally thought of white collar jobs in information, finance, and professional and business services, especially when you look at the cohort of new hires in the last three months, we’re seeing either slowing negative growth for new hires in one cohort versus last year, or flat growth in these sectors,” said Richardson.