By Lucia Mutikani
WASHINGTON (Reuters) – U.S. private employers stepped up hiring in September, but diminishing government financial assistance and a resurgence in new COVID-19 cases in some parts of the country could slow the labor market’s recovery from the pandemic.
Other data on Wednesday confirmed that the economy suffered its sharpest contraction in at least 73 years in the second quarter because of the disruptions from the coronavirus. Record growth is predicted in the third quarter, buoyed by fiscal stimulus and the resumption of many business operations.
But without another rescue package, rising coronavirus infections and political uncertainty that could extend beyond the Nov. 3 presidential election, gross domestic product estimates for the fourth quarter are being slashed.
“With economic momentum cooling, fiscal stimulus expiring, flu season approaching and election uncertainty rising, the main question is how strong the labor market will be going into the fourth quarter,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York.
Private payrolls increased by 749,000 jobs this month after rising 481,000 in August, the ADP National Employment Report showed. Economists polled by Reuters had forecast private payrolls would rise by 650,000 in September. Employment gains were spread across all industries and company size.
Manufacturing payrolls increased by 130,000 jobs and employment at construction sites rose 60,000. Hiring in the services industries advanced 552,000, with trade, transportation and utilities leading the gains.
The ADP report is jointly developed with Moody’s Analytics. Though it has fallen short of the government’s private payrolls count since May because of methodology differences, it is still watched for clues on the labor market’s health.
The ADP report is based on active and paid employees on company payrolls. The Labor Department’s Bureau of Labor Statistics (BLS) counts workers as employed if they received a paycheck during