ADP Jobs Report: What September’s Hiring and Pay Data Mean for Finance Forecasts

ADP’s September jobs report showed private employers added 90,000 jobs. That marked the first acceleration in hiring since May, following three months of slowing job gains. August’s gain was revised down from 38,000 to 36,000. 

The sector and establishment-size breakdowns show September employment gains were uneven across industries and employer sizes. For finance teams, the report provides fresh context for workforce-cost, hiring and compensation assumptions.

Employment Gains Concentrated in a Few Areas

Education and health services led September employment gains, adding 55,000 jobs. Leisure and hospitality added 22,000 jobs, while manufacturing and construction added 17,000 and 15,000 jobs, respectively. 

At the same time, several sectors lost jobs:

• Financial activities: down 16,000
• Professional and business services: down 11,000, and
• Natural resources and mining: down 1,000.

Trade, transportation and utilities employment was unchanged.

Hiring also varied sharply by establishment size. Mid-sized establishments added 54,000 jobs, small establishments added 23,000, and large establishments added 14,000.

The sector and establishment-size results argue against applying a single hiring or wage-pressure assumption across the business.

Pay Growth Holds Steady

ADP’s pay data showed that wage growth remained solid as hiring rebounded.

The median worker’s base pay rose 3.2% year over year. Job-stayers saw a 3.0% increase, while job-changers received a 4.8% gain. 

Gross pay increased 4.7% overall. The gross-pay difference was even wider for job-stayers and job-changers, at 4.4% and 7.3%, respectively.

The difference between job-stayer and job-changer growth suggests finance teams should consider whether internal pay assumptions and external-hiring assumptions need to be modeled separately.

“After a three-month slowdown, job creation rebounded and pay growth remained solid,” ADP Chief Economist Nela Richardson said.

How Finance Teams Can Use the ADP Jobs Report

• Monitor internal payroll indicators. Compare ADP’s data with open roles, time-to-fill, overtime, turnover, offer acceptance rates and starting-pay trends. Those measures will show whether national labor-market shifts are affecting your organization.
• Recheck headcount assumptions by function. Look at where your organization’s workforce and hiring plans align with sectors that added or cut jobs. Forecast workforce needs based on your roles and markets, not the national total.
• Separate merit-pay and recruiting-pay assumptions. ADP’s 3.0% median base-pay increase for job-stayers was below the 4.8% increase for job-changers. Consider using separate assumptions for current-employee compensation and external recruiting costs rather than relying on one companywide wage-growth figure.

More info: ADP National Employment Report