POSTED: Thursday, November 1, 2012 - 12:30pm
UPDATED: Thursday, November 1, 2012 - 12:34pm
NEW YORK (CNNMoney) — Private sector hiring jumped in October, according to a report released Thursday by payroll processor ADP.
Private employers added 158,000 jobs in the month, ADP said, beating economists' forecasts of 143,000. The gains also topped September's figures, which were revised to 114,000 from 162,000 originally.
The October report is the first to feature ADP's new methodology aimed at further aligning its figures with the final monthly data released by the Bureau of Labor Statistics. The ADP report comes out a day before the government's official monthly jobs report, though it has not always been a great predictor of what the BLS report will say.
The revised ADP report, done in collaboration with Moody's Analytics, now offers data on five categories of company size, ranging from small businesses with no more than 19 workers to large companies with at least 1,000 employees. It also breaks down employment in five industries -- construction; financial activities; manufacturing; professional and business services; and trade, transportation and utilities -- rather than three. Also, the sample size has been increased to 406,000 companies, from 344,000.
The largest employers are doing most of the hiring, accounting for 69,000 of the positions added in October, said Mark Zandi, chief economist at Moody's Analytics. They are 15% of the job base but have accounted for 25% of the job growth since the employment recovery began in early 2010.
On the flip side, the smallest employers are hiring at a much slower rate, adding 18,000 jobs in the month. These businesses with 19 or fewer employees make up 25% of the job base, but only 12% to 13% of the growth.
"It feels like the job market is holding its own," Zandi said.
The professional and business services sector added the most jobs, followed by trade, transportation and utilities. A good sign for the economy, Zandi said, is that 23,000 construction jobs were created in October. It's yet another indication that the housing market is bouncing back, and Zandi expects the gains to continue into next year.
Retailers are also hiring in anticipation of a decent holiday season. And the healthcare and leisure and hospitality sectors are also growing.
Manufacturing, however, lost 8,000 jobs, likely as a result of troubles in the European economy, he said. And information services also shed positions.
The government's report is a more expansive look at the national employment picture since it includes both public and private sector hiring. The former has been shedding jobs for the past two years.
Both reports take on enhanced importance this month since they provide the last look into the health of the job market before the presidential election.
The national unemployment rate stands at 7.8%, the lowest in nearly three years and the same rate as it was when President Obama took office.
Going forward, however, companies are unlikely to boost their payrolls until the federal government resolves its fiscal issues, Zandi said. And the unemployment rate won't drop much until companies resume hiring.
"Businesses are not confident enough to hire aggressively," he said, noting that the low rate of new business formation is also a drag on job growth.
Meanwhile, about 363,000 people filed for first-time unemployment benefits in the week ended October 27, down 9,000 from the previous week, the Labor Department said Thursday. That beat economists' estimates of 375,000.
About 3.3 million Americans continued to file for their second week of unemployment benefits in the week ended October 20, the most recent data available.