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Private sector hiring lighter than expected last month

Job seekers check out companies at a job fair in Miami Lakes, Fla. A private survey says hiring remained essentially slow and steady in September.
Job seekers check out companies at a job fair in Miami Lakes, Fla. A private survey says hiring remained essentially slow and steady in September.Alan Diaz / AP

Private sector job creation came in lighter than expected in September but remained essentially in the same slow-but-steady growth range, according to a report Wednesday.

ADP and Moody's Analytics pegged the monthly total at 166,000, lower than estimates of 180,000, with service-sector positions again leading the way.

While generally used as an indicator for what the Bureau of Labor Statistics monthly count will look like, the report takes on special significance now.

The government shutdown is likely to prevent the BLS from releasing the nonfarm payrolls count Friday, meaning markets will have little else to gauge jobs growth on than the ADP numbers.

In turn, the Federal Reserve is closely watching the employment picture to decide whether it should begin to ease back on its $85 billion a month bond-buying program.

The ADP report was largely in keeping with past trends: Small businesses led the way in job creation with 74,000, while large companies added 64,000 and medium-sized contributed 28,000.

Services, which covers a wide swatch from bar and restaurant jobs up to professional assistants, was by far the largest growth areas with 147,000 new jobs. Goods-producing added 19,000.

Trade, transportation and utilities grew by 54,000, while goods producers generated 19,000 and construction added 16,000. Financial activities lost 4,000.

"The job market appears to have softened in recent months. Fiscal austerity has begun

to take a toll on job creation," Moody's economist Mark Zandi said in a statement. "The run-up in interest rates may also be doing some damage to jobs in the financial services industry."

In the past, ADP's count has diverged significantly from the government's count. But that gap has narrowed considerably since ADP joined forces with Moody's, to where the gap has narrowed to about 3,000.

"Longer term trends in ADP look very similar to private payrolls. The pace of gains in ADP has been slightly slower than the payroll tally in the past year, but ADP is another check that the economy is adding about 2 million jobs per year," Citigroup economist Brett Rose said in a note. "Further, the longer term data also confirm that small business was slow to recover after the recession, but in the past two years has been adding substantially to employment growth."

ADP revised its count for August down from 176,000 to 159,000, meaning September actually represented a modest gain the pace of job creation.

_ By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.