WASHINGTON: US private employers stepped up hiring in September, but diminishing government financial assistance and a resurgence in new Covid-19 cases in some parts of the country could slow the labor market’s recovery from the pandemic.
Other data on Wednesday confirmed that the economy suffered its sharpest contraction in at least 73 years in the second quarter because of the disruptions from the coronavirus. Record growth is predicted in the third quarter, buoyed by fiscal stimulus and the resumption of many business operations.
But without another rescue package, rising coronavirus infections and political uncertainty that could extend beyond the Nov. 3 presidential election, gross domestic product estimates for the fourth quarter are being slashed.
Private payrolls increased by 749,000 jobs this month after rising 481,000 in August, the ADP National Employment Report showed. Economists polled by Reuters had forecast private payrolls would rise by 650,000 in September. Employment gains were spread across all industries and company size.
Manufacturing payrolls increased by 130,000 jobs and employment at construction sites rose 60,000. Hiring in the services industries advanced 552,000, with trade, transportation and utilities leading the gains.
The ADP report is jointly developed with Moody’s Analytics. Though it has fallen short of the government’s private payrolls count since May because of methodology differences, it is still watched for clues on the labor market’s health.
The ADP report is based on active and paid employees on company payrolls. The Labor Department’s Bureau of Labor Statistics (BLS) counts workers as employed if they received a paycheck during the week that includes the 12th of the month.
When businesses were shuttered in mid-March, millions of workers were either laid off or furloughed. Economists say the return of furloughed workers when most businesses reopened in May boosted the payrolls numbers reported by the government.
New weekly applications for jobless aid have stalled at higher levels after dropping below 1 million in August as the government changed the way it strips seasonal fluctuations from the data. Data from Homebase, a payroll scheduling and tracking company, showed fewer employees at work in September relative to August.
The government is scheduled to publish its closely followed employment report, which includes public workers, on Friday.
According to a Reuters survey of economists, private payrolls probably increased by 850,000 jobs in September after rising 1.027 million in August.
In a separate report on Wednesday, the Commerce Department said GDP plunged at a 31.4% annualized rate last quarter, the deepest drop in output since the government started keeping records in 1947. That was revised up from the 31.7% pace reported last month and reflected a less sharp collapse in consumer spending than initially estimated.
The government also published data on contributions to GDP by industry, which underscored the havoc wreaked by the virus.
Private goods-producing industries contracted at a 34.4% rate, while services tumbled at a 33.1% pace, and government decreased at a rate of 16.6%.
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