233K jobs added as annual pay grows

Private sector employers added a robust 233,000 jobs in October as annual pay grew 4.6% year over year, payroll giant ADP reported Wednesday.

The ADP National Employment Report found the service-providing sector contributed the bulk of those jobs, 211,000, including 31,000 in professional and business services such as accounting and tax preparation, and 11,000 in financial activities such as banking. The goods-producing sector added only 22,000 jobs, including 37,000 jobs in construction and 4,000 in natural resources and mining offset by a loss of 19,000 manufacturing jobs. 

Small businesses with between one and 19 employees added 10,000 jobs last month, but businesses with between 20 and 49 employees lost 6,000 jobs last month. Medium-size establishments with between 50 and 249 employees gained 58,000 jobs, and those with between 250 and 499 employees added 28,000 jobs. Large establishments with 500 employees or more added 140,000 jobs.

"I'm pleased to report a very strong and healthy labor market with you today in a month that promised to be super messy with a double hit of hurricanes," said ADP chief economist Nela Richardson during a conference call Wednesday with reporters. "We are seeing that the national labor market was strong and is broadly robust."

Patrick T. Fallon/Bloomberg

Year-over-year pay gains for people who stayed at their jobs dipped to 4.6%, continuing a two-year slowdown. For those who changed jobs, pay gains slowed to 6.2%. In professional and business services, the percentage for job stayers was 4.5%.

"In the midst of such strong job gains, the wage premium between job changers and job stayers fell to the lowest number we've ever seen since we've been calculating these numbers in October 2019," said Richardson. 

The premium for switching jobs has fallen from a peak of 9% in 2022 to 1.5% today, so it's less profitable for workers to switch jobs, and that helps explain the drop in the quit rates that ADP is seeing.