Private payrolls grew more than expected in September

Stronger consumer demand is driving the labor market’s consistent growth and should finally produce bigger paychecks for workers early next year.

The September jobs report issued by the Labor Department may show private businesses added about 200,000 employees after a 140,000 increase in August, according to the median forecast of economists surveyed by Bloomberg. Manufacturing, which has been hit by energy sector capital spending cutbacks, a stronger dollar and weaker overseas economies, lost 15,000 jobs – the fifth decline in seven months and the worst of the bunch. “At this pace, full employment is fast approaching”, he said.

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The improving outlook for the labor market is among the reasons Federal Reserve policy makers have said they may raise their benchmark interest rate from near zero before year-end. The manufacturing industry contracted in September, shedding 15,000 jobs.

Zandi expects a “sizable upward revision to August” numbers. Job openings are at an all-time high, consumer confidence is at a postrecession high and Americans have even increased spending a bit recently, particularly on new cars and trucks.

Larger companies, which have lagged in making hiring gains, led the way in September.

With the average levels of both initial and continuing jobless claims little changed from those prevailing heading into the August report, net new job creation probably remained steady at 190,000 last month.

Economists occasionally will modify their estimates for the payrolls report based on the ADP count, though there often are wide disparities between the two counts.

“Despite job losses in the energy and manufacturing industries, the economy is creating close to 200,000 jobs per month, ” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report using ADP’s data.

In September, ADP said, large companies added 106,000 jobs, midsize ones, 56,000, and small businesses, 37,000.

Service-sector employment rose by 188,000 jobs in September, up from 172,000 in August.