Companies added fewer workers than projected in October,indicating the U.S. job market lost momentum amid budget strife inWashington, a private report based on payrolls showed today.

The 130,000 increase in employment was the smallest in sixmonths and followed a revised 145,000 gain in September that wasweaker than initially estimated, according to the ADP ResearchInstitute in Roseland, New Jersey. The median forecast of 39economists surveyed by Bloomberg called for an advance of 150,000jobs.

The monthly figures are the first to show how employment faredduring a 16-day partial federal shutdown that started Oct. 1 andresulted in the furlough of some contractors and other workers.Federal Reserve policy makers meeting today are watching job-marketprogress as they debate when to scale back record monetarystimulus.

“Obviously, there was some impact of the government shutdown,”said Scott Brown, chief economist at Raymond James & AssociatesInc. in St. Petersburg, Florida, and the best forecaster of the ADPfigures in the last two years, according to data compiled byBloomberg. The Fed has “been very clear that the tapering decisionis going to remain data dependent, and this suggests it's still notquite strong enough.”

Stock-index futures held gains after the figures, signalingequities will extend a four-day rally that has driven the Standard& Poor's 500 Index to a record. The contract on the S&P 500expiring in December rose 0.2 percent to 1,770.3 at 8:46 a.m. inNew York.

A report from the Labor Department showed the cost of livingrose as projected in September as fuel charges picked up, cappingthe smallest year-to-year gain in five months. The consumer-priceindex increased 0.2 percent after a 0.1 percent gain the priormonth. The CPI climbed 1.2 percent in the 12 months throughSeptember, the smallest gain since April.

Estimates in the Bloomberg survey for ADP employment ranged fromgains of 70,000 to 177,000 after a previously reported increase of166,000 in September.

Manufacturers, builders and other goods-producing industriesincreased headcount by 24,000. Employment in construction climbedby 14,000, while factories added 5,000 jobs, today's report showed.Trade, transportation and utility companies added 40,000 jobs.

Payrolls at service providers rose by 107,000 in October.

Company Size

Companies employing 500 or more workers added 81,000 jobs.Medium-sized businesses, with 50 to 499 employees, took on 13,000workers and small companies expanded payrolls by 37,000.

“The government shutdown and debt limit brinksmanship hurt thealready softening job market,” Mark Zandi, chief economist atMoody's Analytics Inc. in West Chester, Pennsylvania, said in astatement. Moody's produces the figures with ADP. “Any furtherweakening would signal rising unemployment.”

The shutdown closed national parks, halted some services, andresulted in some furloughs by government contractors. The closingresulted in at least $24 billion of lost economic output, accordingto Standard & Poor's. President Barack Obama's chief economicadviser said last week that it cost the U.S. 120,000 jobs inOctober.

In addition to layoffs at private companies with governmentties, the shutdown may have slowed hiring. McDonald's Corp. ChiefExecutive Officer Don Thompson said on an Oct. 21 earnings callthat closing E-Verify, a federal program to determine employmenteligibility, affected the hiring process.

“It's fairly minimal at this point relative to what's takingplace from a government perspective,” said Thompson, head of theworld's largest restaurant chain based in Oak Brook, Illinois.

At the same time, some companies have been desensitized byWashington politics and are keeping focused on the outlook fordemand.

“As a nation, we've grown a little bit accustomed to the factthat we have a bunch of folks in our nation's capital that a highpercentage of the time” play politics, Daniel Florness, chieffinancial officer of Fastenal Co., a Winona, Minnesota-basedprovider of industrial and construction supplies such as screws andbolts, said on an Oct. 9 earnings call.

“If there's core demand for the things that we sell, that coredemand will be there. I don't think that distraction is going to bethat destructive longer term, but we don't know,” he said.

Figures yesterday showed Americans were still spending in themonth before the government shutdown. Retail sales excluding autosrose 0.4 percent in September following a 0.1 percent gain a monthearlier, the Commerce Department said yesterday.

First Half

While companies have started announcing their hiring plans forthe holiday-shopping season, employment gains have slowed so far inthe second half of the year. Companies added 129,000 workers onaverage from July through September, less than an average increaseof 201,000 in the first six months of the year, according to LaborDepartment data.

The agency will release its monthly report for October on Nov.8, a week later than initially scheduled because of the governmentshutdown.

Amazon.com Inc. the world's largest e-commerce company, willhire 70,000 full-time seasonal workers in the U.S. to meet orderdemand, a 40 percent increase over last year, the Seattle-basedcompany said Oct. 1.

“We're getting ready for an exciting holiday season and thatincludes having to making sure that we have the right amount ofemployees, as well as seasonal help, during that period,” saidThomas Szkutak, Amazon's chief financial officer, during an Oct. 24earnings call.

Wal-Mart Stores Inc., the world's largest retailer, is hiring55,000 seasonal employees, an increase of 10 percent from 2012. Thecompany also will move 35,000 workers to full-time status frompart-time, and another 35,000 to part-time from temporary. Macy'sInc., the largest U.S. department store chain, said it plans onmaking 83,000 holiday hires, about 3,000 more than last year.

The government shutdown will make it difficult for Fed policymakers, who conclude a two-day meeting today, to gauge the progressof the labor market in determining when they should dial back $85billion in monthly asset purchases.

ADP in October 2012 changed the method it uses to calculate itsemployment figures dating back to 2001. The report is now derivedfrom a larger sample, and is released jointly with Moody'sAnalytics.

Bloomberg News

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