US private employers added 90K jobs in September, ADP reported Wednesday, up from a downwardly revised 36K in August. The figure beat the Dow Jones consensus estimate of 68K and snapped a three-month decline in monthly hiring.
Education and health services drove the gains with 55K new positions, followed by leisure and hospitality at 22K, manufacturing at 17K, and construction at 15K.
Financial activities shed 16K jobs and professional and business services lost 11K. Service providers accounted for 59K of the new roles and goods producers 31K. The Northeast led all regions with 56K.
Base pay rose 3.2% year over year while gross pay climbed 4.7%. Job changers recorded base pay growth of 4.8%, against 3.0% for workers who stayed put.
Growth was stronger than first reported
The Commerce Department raised annualized second-quarter GDP growth to 2.2% from the 1.5% previously reported, with consumer spending and investment both stronger than first estimated.
Real final sales to private domestic purchasers, a gauge of underlying demand, were revised up to 4.6%. The upward revision to investment, which includes construction, underscores how central the build-out of AI infrastructure has become to US growth.
Inflation stayed firm. The personal consumption expenditures price index rose 3.4% over 12 months, level from a month earlier, while the overall index gained 0.3% in August and the core reading 0.2%.
Consumer spending jumped 0.9% in the month, helped by higher gasoline prices. Income growth cooled to 0.2% from 0.3%.
The Bureau of Economic Analysis also changed how legal services, investment services, and computer software prices are tabulated, applying the revision retroactively.
Friday's payrolls report is the next test
Fed officials raised benchmark rates by a quarter percentage point earlier in September after August inflation readings came in warmer than hoped.
Policymakers now see persistent inflation as the bigger policy risk than the labor market, which most officials view as broadly sound.
The BLS releases its September nonfarm payrolls report Friday. The agency reported this week that there were 1.01 open jobs for every unemployed person in August, down from 1.06 in July.
ADP has been a poor predictor of the BLS private payrolls estimate, so Friday's number could still cut against the rebound narrative.
For investors, the combination of firmer growth and sticky 3.4% inflation leaves the Fed with little reason to reverse course soon.
