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US private hiring jumps again in October
US firms hired at a rapid pace in October, with strong gains in the services and goods sectors, according to a monthly survey released on Wednesday.
Despite the impact of two hurricanes, and a persistent shortage of workers, private companies added 227,000 employees in October, the fifth month with gains of 200,000 or more, according to payroll services firm ADP's National Employment Report.
That was well above the 180,000 consensus forecast, and better than the 218,000 increase posted in September, which was revised down from the original report.
"Despite a significant shortage in skilled talent, the labour market continues to grow," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
The increase was boosted by the 189,000 rise in the dominant services sector, with 38,000 added by goods-producing firms, including 17,000 each in manufacturing and construction.
The report is scrutinised ahead of the government's official employment report, which is due on Friday and which economists project will show a gain of 190,000 non-farm jobs.
However, the two surveys are frequently out of step and in September the difference was about 100,000 positions.
Mr Yildirmaz noted that in the struggle to attract and retain employees, larger employers have an advantage "as they are more apt to provide the competitive wages and strong benefits employees desire." The ADP report is derived from actual payroll data and covers nearly 24 million workers.
Ian Shepherdson of Pantheon Macroeconomics said he was surprised not to see more of a slowdown from the impact of the Hurricane Florence but the ADP data do not capture Hurricane Michael while the government data will.
"We'd be very surprised to see Friday's headlines as strong as the ADP data but with hurricanes making landfall in the survey weeks in both September and August - that has never happened before, as far as we know - we're braced for anything," he said in a research note.
US employment costs were also up as they rose by more than forecast in the third quarter as increases in private wages and salaries accelerated, indicating workers are gaining leverage in a tightening labour market.
The employment cost index, a broad gauge monitored by theFederal Reserve, increased 0.8 per cent in the July-September period from the prior quarter, according to a Labor Department report on Wednesday. That compared with the median estimate of economists for a 0.7 per cent increase. The gauge was up 2.8 per cent from a year earlier, matching the prior quarter as the fastest gain since 2008.
The data suggest companies are offering better compensation packages to workers amid the lowest unemployment rate since1969, reinforcing the Fed's outlook for gradual interest-ratehikes to keep the economy from overheating. The report also gives President Donald Trump and Republicans another positive economic talking point ahead of next week's midterm elections.
The government's quarterly ECI reading - which covers employer-paid taxes such as Social Security and Medicare in addition to the cost of wages and benefits - offers a glimpse at how American workers are being compensated.
The latest reading shows momentum in worker compensation ahead of October wage figures due in Friday's monthly employment report.
Economists and investors expect the Fed to continue gradually raising interest rates, including a December increase that would be the year's fourth. AFP, BLOOMBERG