Nonfarm private employment grew 106,000 from September to October of 2007 on a seasonally adjusted basis, according to the ADP National Employment Report. The estimated change in employment from August to September was revised up 3,000 to 61,000. October’s increase of 106,000 marked an acceleration of private nonfarm employment after three months (July through September) during which the average monthly change was just 43,000.
In October, employment in the service-providing sector of the economy grew a healthy 134,000. Employment in the goods-producing sector declined 28,000, the eleventh consecutive monthly decline. Employment in the manufacturing sector fell 14,000.
The report was much stronger than expected. Economists had been expecting on average 58,000 jobs created in October. The ADP numbers bode well for Friday's Non Farm Payrolls report. Based on the ADP numbers, which as show above is closely correlated with NFP's, implies NFP growth of about 135,000 for the month of October. Economists are expecting growth of around 90,000.
The ADP report shows continued weakness in manufacturing and goods producing sectors however that has more than been offset by growth in service sector jobs. One month does not make a trend but I have to admit to being surprised at the resilience of the US job market.
A couple of months ago the employment market appeared to be taking a dive. Whilst it has definitely slowed, the ADP report suggests US employment growth is holding up for the time being. The NFP report will be watched closely on Friday to see if it confirms the ADP data.