ADP report shows jobs growth as white-collar layoffs accelerate

ADP’s latest jobs report shows a U.S. economy that’s taking one step forward and one step back.

According to the report released Wednesday morning — which, per ADP, is “an independent measure of the labor market based on the anonymized weekly payroll data of more than 26 million private-sector employees in the United States” — employers added 42,000 jobs in October. Annual pay was up 4.5%, unchanged from September.

On the surface, that could look like a rebound after two months of negative job growth. But dig deeper into the data, and you’ll see a widening split between sectors as well as serious white-collar retrenchment, even as the government shutdown — now the longest in history — drags on.

Hiring was concentrated in education and health care (+26,000) and trade, transportation, and utilities (+47,000). Meanwhile, white-collar and consumer-facing industries continued to shrink, and shrink fast. Professional and business services (–15,000), information (–17,000), and leisure and hospitality (–6,000) all shed jobs for a third straight month.

This pattern — growth in areas like healthcare and logistics people effectively have to spend and thus demand is inelastic, versus contraction in areas where people must choose to spend — captures the “bifurcated” economy that Federal Reserve Chair Jerome Powell spoke of at last month’s FOMC press conference. Low-income and service-sector workers are still employed, but inflation is eroding their purchasing power. Higher-income white-collar workers, once shielded, are now seeing layoffs across not just media but tech and consulting — the once-strong bastions of the knowledge economy. Meanwhile, tens of thousands of government employees find themselves furloughed, a reality that isn’t captured in private-sector-only reports like ADP’s.

With the Bureau of Labor Statistics still shuttered and Washington effectively closed for business, ADP’s private-payrolls data has become one of the few real pulses on hiring, however imperfect. Earlier this year, President Donald Trump fired the BLS commissioner after complaining about “fake” jobs numbers. Now, little official data is being released at all.

The Fed, which cut rates in October expressly on fears of labor-market weakness, will likely take little comfort from today’s report. Very modest positive hiring plus flat pay growth, plus white-collar losses? In all, it suggests the economy isn’t collapsing, while it’s definitely not accelerating or even healing either. The picture the ADP report shows is of a U.S. adding just enough jobs to avoid recession headlines, and losing just enough to feel like a recession anyway.