Private-sector jobs growth slows to 130,000 in October

Private-sector employment increased by 130,000 jobs in October as the government shutdown weighed on the monthly figures.

The job market has been weakening in the past several months and businesses with fewer than 50 employees reflected the uncertainty of the brinkmanship in Washington over fiscal issues, according to the ADP monthly employment report released Wednesday, which is produced in collaboration with Moody’s Analytics.

The figure is below the 150,000 average that the economy has been churning out over the past year.

September’s figures were revised down to 145,000 from 166,000.

Mark Zandi, chief economist with Moody’s, said the October figures are soft and that the “job market is slowing but not breaking.”

The service sector, which has led the labor market’s expansion, showed some weakness, adding only 107,000 compared with 130,000 in September.

Weak jobs growth is certain to keep the Federal Reserve in stimulus mode into the spring. Zandi, among other economists, expect the central bank to wait until March to taper its $85 billion in monthly stimulus.

Economic data delayed by the government shutdown could take several months to shake out before there is a clearer picture on the trajectory of the economy. 

Meanwhile, construction jobs picked up by 14,000 and manufacturing added 5,000. Goods-producing employment rose by 24,000 jobs in October, up from 16,000 in September. 

Despite the drop off in service-sector growth, Zandi expects that it will get revved up heading into next year especially if “Washington can reasonably and gracefully” resolve some pressing fiscal issues. 

Government funding runs out Jan. 15 without an agreement and the debt ceiling extension deadline is Feb. 7.

The next jobs report from the government is due out Nov. 8, a week later than originally planned because of the 16-day government shutdown. 

Zandi expects that the report will show jobs growth of only 100,000 and the unemployment rate could tick up to 7.4 percent from 7.2, mostly because of the shutdown. 

The jobs market had weakened over the summer because of the Jan. 1 tax increases and the start of sequester cuts in the spring that Zandi argues that the economy is still absorbing.