US private-sector businesses saw their worst month for employment losses since the early months of the pandemic, shedding 32,000 jobs in September. Hiring rates have reached a disconcerting bottom of 3.2% in August. This is the smallest number of bills we’ve tracked since 2013. The latest figures, released by ADP on Wednesday, highlight a concerning shift in the labor market amid ongoing economic uncertainties.
ADP’s data was the first to indicate that September job gains were likely to be below economists’ consensus expectations. They had been thinking 50,000 jobs gain, so this came as a real letdown. Those payroll gains for August were first reported as 54,000. That figure has since suffered an extreme revision downward to reflect a loss of 3,000 jobs. This change is an early sign of any overall softening in the labor market as firms struggle with numerous economic headwinds.
On Friday, investors’ initial reactions to the disappointing employment data were cautious. As they rushed to the safety of bonds during the tumult, the 10-year Treasury yield fell to 4.108%. Futures for major US stock indices reflected this uncertainty: S&P 500 futures fell by 0.4%, Nasdaq 100 futures slipped 0.5%, and Dow futures were down 148 points, or 0.32%. These decreases happened despite widespread fears of a coming government shutdown.
The report’s timing coincided with the release of the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) earlier this week, which further underscored the challenges facing the job market. When the pandemic hit in early 2020, it upended normal hiring patterns. According to new figures, recovery efforts are beginning to slow down.
ADP used anonymized and aggregated payroll data from its clients to create the September employment estimates. This approach uncovers important information about employment shifts between industries. It highlights the growing panic among investors who are looking for any sign of economic activity — with no other broad-based signals available.
US stock futures continued to hold even though the ADP report came in quite poorly right after the release of this negative job print. This implies a muted reaction from the market. Investors are still keying in on economic news as they move through this new world full of unknowns and possible snapback.