U.S. private payrolls increased less than expected in October and activity in the services industry cooled, providing early signs of a slowdown in economic growth as fiscal stimulus diminishes and new COVID-19 infections surge across the country, Reuters reported. The recovery from the coronavirus pandemic could also be impacted over the next few months by political uncertainty following Tuesday’s cliffhanger presidential election, which economists warned could cause businesses to be more cautious about spending decisions. The election hung in the balance on yesterday, with a handful of close-fought states set to decide the outcome in the coming hours or days. “This is not a good outcome for the economy since the headwinds from rising Covid cases, troubled state and local government finances and falling incomes as unemployment benefits expire, are growing in strength,” said James Knightley, chief international economist at ING in New York. Private payrolls increased by 365,000 jobs last month after rising 753,000 in September, the ADP National Employment Report showed on Wednesday. Economists polled by Reuters had forecast private payrolls would advance by 650,000 in October. Job gains last month were broad, though they were concentrated in industries directly impacted by the coronavirus crisis, including the leisure and hospitality sector. The resurgence in COVID-19 cases across the country could lead to renewed business restrictions to slow the spread of the respiratory illness as winter approaches.
