The U.S. added 208,000 new jobs in September, according to payroll services firm ADP, beating the Dow Jones estimate of 200,000 and offering yet another sign that the labor market remains strong despite widespread predictions that a recession is looming. This is up from a revised 185,000 jobs in August and comes just two days ahead of the latest federal jobs report, which is predicted to show 275,000 new jobs in September. 

Nela Richardson, chief economist at ADP, told Cheddar News that the data show the labor market is holding steady, thanks in part to school reopenings. 

"That cannot be underestimated as a really critical part of the labor market infrastructure, allowing working families to go back to work," she said. "We saw in the BLS report last month a pick-up in the labor force participation rate, and we think that that drove the 208,000 we saw in the private sector at ADP." 

In addition, the ADP report found that annual pay was up 7.8 percent year-over-year, and that workers who stayed put during the period benefited the most from higher pay. This marks a slowing in the recent trend of job-changers raking in double-digit year-over-year gains going back to the summer of 2021. In September, their annual pay jumped 15.7 percent, which is down from a revised 16.2 percent in August. ADP noted that this is the biggest deceleration in the three-year history of its data. 

"That could signal that employers are responding to looser labor market conditions right now," Richardson said." They don't have to pay up quite so much. It's not quite as competitive as it was over the summer." 

Those who remained at their jobs, meanwhile, saw a 7.8 percent increase from a year ago, which is up from a revised 7.7 percent in August. By industry, job-stayers in leisure and hospitality beat out other sectors with a sizable 11.9 percent year-over-year pay hike. 

Looking at the overall job gains, the service sector picked up the slack in September, as goods-producing industries saw a decline of 29,000 jobs. Within services, "trade/transportation/utilities," which includes retail, contributed 147,000 new jobs, while professional and business services added the second-most jobs at 57,000. Education and health services added 38,000, and leisure and hospitality added 31,000.  

ADP anticipates more gains for services as the back-to-school season gives way to the holiday shopping season and consumers ramp up their spending. 

"The service industry came in solid this month, and we expect that to continue as long as there are workers available to hire," Richardson said.