Bloomberg News

ADP Estimates U.S. Companies Added 91,000 Jobs in September

October 05, 2011

(Updates with ISM index in sixth paragraph, markets in seventh and Prakken comment in 10th.)

Oct. 5 (Bloomberg) -- Companies in the U.S. added 91,000 jobs in September, according to data from ADP Employer Services.

The increase followed a revised 89,000 gain the prior month, Roseland, New Jersey-based ADP said today. The median forecast of economists surveyed by Bloomberg News called for an advance of 75,000.

Job gains haven’t been sufficient to bring down the unemployment rate, which has held at or above 9 percent for 26 of the past 28 months. A Labor Department report in two days is projected to show businesses added 90,000 jobs in September, according to the median forecast of economists surveyed.

“Employment is likely to languish over the intermediate term until business leaders see an improvement in both actual demand and their demand expectations,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report.

Projections in the Bloomberg survey of 39 economists ranged from declines of 10,000 to gains of 117,000.

Service industries expanded at a faster pace than forecast in September, another report showed. The Institute for Supply Management’s index of non-manufacturing businesses decreased to 53 in September from 53.3 a month earlier. A reading above 50 signals expansion.

Survey Results

The measure was projected to drop to 52.8, according to the median forecast in a Bloomberg News survey. Estimates from 75 economists surveyed ranged from 51.3 to 55. The Tempe, Arizona- based group’s index averaged 56.1 in the five years to December 2007, when the last recession began.

Stocks climbed after the ISM report. The Standard & Poor’s 50 Index rose 0.2 percent to 1,126.41 at 10:08 a.m. in New York. Treasury securities dropped, sending the yield on the benchmark 10-year note up to 1.89 percent from 1.82 percent late yesterday.

Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in March, when it understated the gain in jobs by 29,000. The estimate was least accurate in June, when it overestimated the increase in employment by 100,000.

Last month, ADP’s initial figures showed a 91,000 gain in company payrolls for August, while the Labor Department’s data showed an increase of 17,000 private payrolls.

‘Tepid’ Conditions

“You have to characterize labor-market conditions as tepid and disappointing,” Joel Prakken, senior managing director of Macroeconomic Advisers, which produces that data with ADP, said on a conference call from St. Louis. “There is an element of structural unemployment that persists.”

Employers announced the most job cuts in more than two years in September, led by planned reductions at Bank of America Corp. and in the military, another report today showed.

Announced firings jumped 212 percent, the largest increase since January 2009, to 115,730 last month from 37,151 in September 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Cuts in government employment, led by the Army’s five-year troop reduction plan, and at Bank of America accounted for almost 70 percent of the announcements.

Today’s ADP report showed an increase of 1,000 workers in goods-producing industries last month, which include manufacturers and construction companies. Employment at factories fell by 5,000.

Factory Orders

Orders to manufacturers, a stalwart of the expansion, contracted for a third consecutive month in September, the first such series of declines since the recession ended in June 2009, according to figures this week from the Institute for Supply Management.

Service providers added 90,000 workers in September, today’s figures showed.

Companies employing more than 499 workers cut 5,000 jobs. Medium-sized businesses, with 50 to 499 employees, increased payrolls by 36,000 and employment at small companies climbed by 60,000, ADP said.

Federal Reserve Chairman Ben S. Bernanke, speaking before Congress’s Joint Economic Committee in Washington, yesterday said the central bank stood ready to take additional steps to boost growth and urged lawmakers against taking steps to curtain the budget deficit that might harm an already “sluggish” recovery.

“Recent indicators, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period ahead,” Bernanke said. Fed officials expect a “somewhat slower pace of economic growth over coming quarters” than they did in June, he said, without giving a specific forecast.

Unemployment

The Labor Department figures on Oct. 7 will also show the jobless rate held at 9.1 percent last month, according to the Bloomberg survey median.

Total payrolls are forecast to increase by 60,000 after no change in August, according to the Bloomberg survey. Private payrolls, which exclude government jobs, are forecast to rise from 17,000 in August.

Citigroup Inc., the third-biggest U.S. bank, is among firms that have turned more cautious about hiring. It said last month it will limit hiring to only “critical” jobs as the economic slowdown continues and revenue slumps.

“We are currently only filling positions we believe are critical to the line of business or function,” Shannon Bell, a spokeswoman for the New York-based bank, said in an interview Sept. 15.

The ADP report is based on data from about 340,000 companies with more than 21 million workers on payrolls. Macroeconomic Advisers LLC in St. Louis produces the data with ADP.

--Editors: Carlos Torres, Vince Golle

Company News: C US <Equity> CN

To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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