In this news, we discuss the U.S. private payrolls beat expectations in September.
WASHINGTON (Reuters) – U.S. private employers stepped up hiring in September, but declining government financial support and the resurgence of new cases of COVID-19 in parts of the country could slow the job market recovery after the pandemic.
Other data on Wednesday confirmed that the economy suffered its sharpest contraction in at least 73 years in the second quarter due to the disruption from the coronavirus.
“The job market is improving,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “But job growth will slow through the remainder of 2020 and into 2021. The big gains from reopening businesses are fading.”
Private payrolls increased by 749,000 jobs this month after increasing by 481,000 in August, according to the ADP national employment report. Economists polled by Reuters had predicted that the private wage bill would increase by 650,000 in September. Employment gains were distributed across all industries and firm size.
The ADP report is jointly developed with Moody’s Analytics. Although it hasn’t hit the number of private government payrolls since May due to differences in methodology, it is still being watched for clues about the health of the labor market.
The ADP report is based on active employees and paid on company payroll. The Department of Labor’s Bureau of Labor Statistics (BLS) counts workers as employees if they received a paycheck during the week that includes the 12th of the month.
When businesses were closed in mid-March, millions of workers were either laid off or put on leave. Economists say the return of workers on leave when most businesses reopened in May boosted government-reported payroll figures.
New weekly jobless aid claims have stagnated at higher levels after falling below 1 million in August as the government changed the way it suppresses seasonal fluctuations in data. Data from Homebase, a payroll planning and tracking company, showed fewer employees at work in September compared to August.
New daily cases of COVID-19 started to increase last week for the first time in eight weeks. Infections are expected to increase in the fall, which economists say will result in some restrictions being imposed on companies in the service sector.
US stock indices were trading higher. The dollar appreciated against a basket of currencies. US Treasury prices have fallen.
EXPECTED EMPLOYMENT REPORT
The government is expected to release its closely watched employment report, which includes civil servants, on Friday.
According to a Reuters survey of economists, private payrolls probably increased by 850,000 jobs in September after increasing by 1.027 million in August.
With government employment set to be held back by the departure of some temporary workers hired for the 2020 census and coronavirus budget challenges in states and local governments, the non-farm payroll is expected to rise by 850,000 in September after having increased by 1.371 million in August.
That would leave employment 10.7 million below its February level. Job growth peaked in June when the payroll jumped to a record 4.781 million jobs.
Economists attribute the moderation in job gains to the expiration of programs that helped companies pay wages, as well as an income subsidy for the unemployed.
In a separate report on Wednesday, the Commerce Department said gross domestic product plunged at an annualized rate of 31.4% in the last quarter, the biggest drop in output since the government began keeping records in 1947. This has been revised up from the 31.7% rate reported last month. and reflected a smaller collapse in consumer spending than initially estimated.
Profits after tax without valuation of inventories and adjustment of capital consumption fell at a revised rate of 10.5%. It was previously estimated that profits had declined at a rate of 11.7%. When measured on the income side, the economy contracted to a rate of 33.5% in the second quarter. Gross domestic income (GDI) would previously have declined at a rate of 33.1%.
The average of GDP and GDI, also known as gross domestic production and considered a better measure of economic activity, declined at a rate of 32.5% in the last quarter. This has been revised from the rate of 32.4% estimated last month.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
Original © Thomson Reuters
Originally posted 2020-09-30 07:36:12.