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The good news in October was that it was the best month for job growth since June and every industry added jobs. As for the bad news, the lion’s share of the gains came within the largest companies. Don’t get me wrong adding jobs generally, regardless of where they are is a good thing. What mitigates the benefit of the largest companies adding the most employees is that many of the hires are seasonal and smaller companies are continuing to struggle with larger companies in recruitment over talent.
According to the ADP Report, reflecting the growth in private-sector jobs in October, there were 571,000 private-sector jobs added. That included over 115,000 for small businesses, over 114,000 in midsized, and for large over 342,000.
We’ve seen this dynamic of large companies widely adding more jobs than their smaller counterparts exacerbate throughout the year as we’ve had more job openings than people searching for work. The resulting wage inflation is far more easily absorbed by large companies as compared to their smaller counterparts. Add in benefits, which commonly larger companies are more readily able to provide, and it’s creating significant disruption to traditional job creation. In a typical jobs recovery, small companies hire at a greater rate than large companies, as small companies are commonly forced to shed the most employees during difficult economic times.
May was the last month small companies outhired large companies. The top industries for hiring in October were leisure and hospitality, professional and business, and in third trade, transportation and utilities.
This is the fifth consecutive month leisure and hospitality have been at the top. It’s clear the hospitality jobs leading the way for five straight months is a COVID recovery story. The next best story during the month was continued strong employment within the manufacturing and construction industries. That’s good news as it’s a leading economic indicator but also because progress in hiring in those industries can help mitigate supply chain issues and improve the speed at which projects are completed. Tomorrow we’ll get the full jobs picture with government jobs added in.