(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
WASHINGTON — Companies added fewer workers than projected in September, indicating the U.S. job market is struggling to gain momentum, a private report based on payrolls showed Wednesday.
The 166,000 increase in employment followed a revised 159,000 rise in August that was smaller than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The median forecast of 40 economists surveyed by Bloomberg called for an advance of 180,000.
Faster progress in hiring and wage growth is needed to sustain gains in consumer spending, the biggest part of the economy. Wednesday's figures will be the only snapshot of September employment available until an end to the first partial shutdown of the federal government in 17 years allows the Labor Department to issue its monthly payrolls report.
"The labor market is not weak but not as strong as we'd like," said Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Fla., and the top forecaster of ADP in the past two years, according to data compiled by Bloomberg. "There's a lack of traction. It's a sign things have slowed down a bit in the economy."
Estimates in the Bloomberg survey ranged from gains of 160,000 to 235,000. The prior month's figure was revised from a previously reported increase of 176,000.
Manufacturers, builders and other goods-producing industries increased headcount by 19,000. Employment in construction boosted by 16,000, while factories added 1,000 jobs, Wednesday's report showed.
Payrolls at service providers rose by 147,000 in September, restrained by a 4,000 decrease in financial services.
"The job market appears to have softened in recent months," Mark Zandi, chief economist at Moody's Analytics Inc., said in a statement. Moody's produces the figures with ADP. "Fiscal austerity has begun to take a toll on job creation" and higher interest rates "may also be doing some damage."
Companies employing 500 or more workers added 64,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 28,000 and small companies increased payrolls by 74,000.
The government on Tuesday began a partial shutdown that idled as many as 800,000 federal employees, closed national parks and halted some services after Congress failed to break a partisan deadlock. Republicans and Democrats remain at odds over whether to tie any changes to the 2010 Affordable Care Act to a short-term extension of government funding.
Wednesday's figures come after lawmakers stiffened their positions and sought to shift blame to the other side as the shutdown showed no signs of ending quickly. The Labor Department will not release its monthly report if the federal government is closed on Oct. 4, the day for which it was scheduled to be published, an Obama administration official said earlier this week.
In the absence of the Labor Department's jobs data, "the ADP report would take on far greater significance," Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, said in a note to clients on Sept. 30. "We will be comfortable relying on the ADP series as a close proxy of September hiring."
Retailers have begun announcing plans to add workers for the holiday shopping season. Wal-Mart Stores, the world's largest retailer, is hiring 55,000 seasonal employees, a 10 percent rise from 2012. The company also will move 35,000 workers to full-time status from part-time, and another 35,000 to part-time from temporary.
Macy's, the largest U.S. department store chain, said it plans on making 83,000 holiday hires, up from about 80,000 last year. Kohl's said it will take on 53,000 workers for the holiday season, about the same as last year.
The Labor Department report was also projected to show that overall hiring, which includes government jobs, climbed 180,000 last month after rising 169,000 in August, according to the Bloomberg survey median. The jobless rate held at 7.3 percent, the lowest level since 2008, economists projected.
Still, the unemployment rate remains elevated, according to Federal Reserve policy makers, who at their September meeting said they need evidence of more progress in the expansion before deciding to scale back record monetary stimulus.
ADP in October 2012 changed the method it uses to calculate its employment figures dating back to 2001. The report is now derived from a larger sample, and is released jointly with Moody's Analytics of West Chester, Penn.
_ With assistance from Chris Middleton in Washington.