An early estimate of nonfarm private employment showed a surprisingly strong rebound in September after a disappointing August, according to data released by ADP on Wednesday.
Most of the increases came from large firms with more than 1,000 employees.
The headline monthly change in employment—published in advance of the Bureau of Labor Statistics’ more comprehensive jobs report on Friday—rose to a gain of 568,100 jobs from a downwardly revised 339,700 in August and beating analyst estimates of 430,000.
Most of the increases came from large firms with more than 1,000 employees, which posted a substantial net gain of 353,600 jobs on the month, or 214% more than the gain in August.
At the same time, private firms with 50 to 999 employees saw a decline in net employment, down by 15,400 to 151,000 in September. Small firms with fewer than 49 employees gained 63,400 employees, up by 2,600 compared to August.
This data continues to support our case that even though the labor market has been tight for most firms, the effects are uneven across firm sizes.
Most middle market businesses have struggled to hire and retain employees as workers have switched to higher-paying jobs and better working environments – two benefits that larger companies can offer.
There is no shortage of anecdotal evidence within every industry that upper-market firms with deep pockets are poaching employees from smaller firms by offering better pay and bonuses, especially for experienced and highly skilled people.
Overall, while the headline gain in net employment was an unexpected but encouraging sign, the ADP report has not been a reliable predictor of the more widely used payroll data from the Bureau of Labor Statistics.
Still, we expect that the BLS data on total employment will bounce back from the seven-month low of 235,000 in August.
For more economic insights on middle market companies, please visit the RSM US website.