US Labor Market Cooling: October ADP Report Highlights Challenges

Article Summary

• Average weekly layoff of 2,500 jobs at US companies, according to ADP.
• Private job gains of 42,000 following previous months' declines.
• Delayed release of official employment data due to government shutdown.
• Large-scale layoff plans announced by major companies like Amazon and Target.
• Rise in initial jobless claims.
• Increasing concerns about job security among American workers.
• Growing difficulty in finding comparable quality jobs after job loss.
• Increase in applicants for jobs traditionally avoided due to low pay or poor conditions.

US Labor Market Cooling: A Closer Look at October ADP Data

U.S. companies trimmed an average of 2,500 jobs per week in the four weeks ended Nov. 1, according to figures released Tuesday by the ADP Research Institute. The downtrend signals that the labor market lost momentum in late October.

The ADP monthly employment report released Nov. 5 showed private payrolls increased by 42,000 after declines in the previous two months. Spot gold briefly rose above $4,080 per ounce following the data release, while spot silver gained over 1.00% on the day.

Impact of Delayed Official Data

The ADP snapshot of the labor market helps to fill the void created by the delay in the release of official employment data due to the longest government shutdown in history. Although funding has been restored to official statistical agencies, the timing of the release of October economic data remains uncertain.

The U.S. Bureau of Labor Statistics is scheduled to release the September jobs report on Thursday, which is expected to show that U.S. nonfarm payrolls increased by 55,000 from the prior month.

Layoffs and Corporate Plans

The ADP weekly data reveal numerous announcements this month by major companies of layoff plans, including Amazon and Target. Planned layoffs are at the highest level for any October in more than 20 years, according to a report from personnel consulting firm Challenger, Gray & Christmas Inc.

Additional Data from Bureau of Labor Statistics

Other data posted on the Bureau of Labor Statistics website show that initial claims for unemployment insurance totaled 232,000 in the week ended Oct. 18 -- roughly in line with application levels in mid-September. The weekly report hadn’t been published since the federal government shut down last month.

Rising Concerns About Job Security

Meanwhile, Americans’ concerns about job security are on the rise. A Bloomberg News-Harris Poll conducted Oct. 23-25 showed that 55% of employed Americans are worried about losing their jobs.

Challenges for Job Seekers

Polls show that nearly half of employed Americans say they would need four months or longer to find a job of similar quality if they lost their jobs now. That gives the upper hand to employers who have traditionally struggled to fill positions, especially those still grappling with a large number of vacancies and 27% wage gains since the start of the pandemic.

Although the latest data show that the overall unemployment rate in August remained fairly low at 4.3%, the amount of time people spend looking for work is getting longer. Nearly 26% of unemployed workers that month had been out of a job for more than six months, one of the highest proportions in a decade, U.S. Bureau of Labor Statistics data show.

Return to Undesirable Jobs

Human-resources agencies and employers are reporting a resurgence in applicants for jobs that people typically shunned because of low pay, irregular hours or poor working conditions. Even dirty jobs at materials-recycling facilities -- where people still have to partially sort recyclables by hand -- are drawing more applicants.

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