U.S. private jobs rose 86,000 in October; white-collar hiring fell

By Tom Whitfield

U.S. private-sector employers added 86,000 jobs in October, matching September’s downwardly revised gain and beating the Dow Jones economist survey’s 75,000 forecast, according to Automatic Data Processing (ADP) data released Wednesday. The result suggests stabilization after a soft summer, not a broad hiring rebound. The release summary did not specify ADP’s employer sample size or the Dow Jones survey’s respondent count.

Where did October’s gains come from?

Services supplied nearly all net additions:

• Trade, transportation and utilities: +39,000
• Education and health services: +28,000
• Leisure and hospitality: +19,000
• Financial activities: +15,000
• Construction: +13,000

Professional and business services cut 27,000 jobs, contracting for a third straight month. Natural resources and mining shed 8,000, while information services lost 2,000. Manufacturing employment also showed slight softening.

Goldman Sachs researchers said the key signal was the continued contraction in white-collar roles, rather than the 86,000 headline. They linked it to companies using artificial intelligence (AI) to remove entry-level white-collar and back-office positions.

The sector split combined strong in-person services with weak white-collar-heavy fields. Education, health care, leisure and hospitality, and transportation and utilities were described as harder for AI to replace; professional and business services and information services were more exposed. For workers, October’s job growth was concentrated in in-person services, not the office-based fields shedding jobs.

How strong were hiring and pay across company sizes?

Midsize businesses, defined here as those with 50 to 499 employees, added 33,000 jobs. Small businesses added 28,000, and large businesses added 24,000. All three size classes hired.

ADP chief economist Nela Richardson said: “Employers across all size classes hired last month, and our data show job-changers were drawn by bonuses, overtime and increased hours in addition to higher base pay.” Richardson said the workers together saw the fastest income growth since March 2024.

Annual pay for job-changers rose 4.8% year over year (compared with a year earlier), versus 3% for job-stayers. Overall base pay increased 3.2%, while total compensation rose 4.7%. Labor-cost pressures have not fully faded. For an individual worker, pay growth ran faster among people changing employers than among those staying put.

Why do smaller employers matter?

JPMorgan analysts said small and midsize companies are more sensitive to interest rates, credit conditions and policy shifts, making weak hiring a warning signal. They also said those businesses provide the vast majority of U.S. jobs. If they keep pulling back on hiring and capital spending, household income and consumption would weaken, raising the risk of an economic downturn.

Bank of America said the AI dividend in this cycle has “winner-take-all” characteristics. It sees the effect arriving as gradual hiring freezes (stops to new hiring), rather than large one-time layoffs, so the negative macroeconomic impact would emerge slowly.

Well-funded large technology companies can keep investing in AI to cut costs and improve efficiency, with relatively limited compliance pressure. Small and midsize firms face pressure from both sides: large companies use technology to lower costs and take market share, while banks lend less in a high-rate environment, making financing scarce and expensive.

Large technology employers retain room to invest, while smaller firms face a tighter hiring and credit environment.

Is October a durable turning point?

The underlying pace of U.S. private-sector job growth has fallen back to around 70,000 a month. September’s 90,000 and October’s 86,000 were described as a temporary rebound. Some institutions warn that a three-month rolling average (a smoothed three-month pace) staying below 70,000 would mean the underlying hiring trend had formally stepped down.

October repaired the headline, but structural hiring concerns had not disappeared.

What comes next?

The U.S. Bureau of Labor Statistics will release October nonfarm payrolls Friday, a broader jobs count than ADP’s private-employer measure, and Dow Jones economists expect a gain of 59,000 after September’s 29,000. Separate Tuesday data showed U.S. job quits at their highest level since March 2025, which analysts read as improving labor market liquidity (the ability to move between jobs).

Analysts broadly expect resilient wages to constrain the Federal Reserve’s room to cut rates, and they warn against assuming rapid cuts too early. Three indicators matter next: whether the three-month job-growth average stays near 70,000, whether small and midsize hiring weakens further, and how wage growth changes.

The coming payrolls report will test whether October marked stabilization: a gain near 59,000 alongside steadier small-business hiring would support that reading, while another slowdown would strengthen the case for a lower underlying trend.