Private Payrolls Beat Expectations With 571,000 Hires, Driven By Strong Hospitality Sector

For the second month in a row, hospitality drove a surge in new hiring as private payrolls increased by 571,000 in October.

The report by private payroll processing firm ADP said the number beat expectations. The 571,000 new positions outpaced the 395,000 projected by Dow Jones and it also beat the downwardly revised number for September of 523,000.

The hospitality sector, considered an effective proxy for all economic activity, drove the growth with 185,000 jobs added. The sector was battered by the COVID-19 pandemic and there was concern that the spread of the Delta variant would limit hiring during the economic reopening.

The strength of the hospitality sector has been significant during the last two months for the part it has played in beating hiring expectations. In September, the hospitality sector contributed 226,000 new hires.

In another repeat from September’s payroll report, large enterprises were responsible for more hires than smaller businesses. Companies with 500 or more employees led job creation with 342,000 new hires, but smaller businesses with fewer than 50 workers did better than in September with 115,000 new jobs. Medium-sized enterprises contributed the remaining 114,000 to the final tally.

Labor shortages have been an enduring problem in the wake of the COVID-19 pandemic, which disproportionately impacted areas like the hospitality sector. However, the new payroll report shows that employers may have adapted to the hiring environment amid the Delta variant as consumers continue seeking out services and demand continues to remain strong.

This report arrives two days before the Labor Department releases its non-farm payrolls report for October. In September, the non-farm hires recorded for the month were 194,000, falling well below expectations.