The U.S. private sector added more jobs than expected in September as the labor market bounced back after showing signs of cooling in recent months, according to the ADP National Employment Report released Wednesday morning.

Companies added 143,000 jobs in September – more than the 120,000 gain predicted by LSEG economists. The report also revised August’s jobs gains upward from 99,000 to 103,000.

ADP found that workers’ pay gains, which can contribute to inflation, slowed to a year-over-year increase of 4.7% for job-stayers, while job-changers saw a greater decline from 7.3% in August to 6.6% in September.

“Stronger hiring didn’t require stronger pay growth last month,” said ADP chief economist Nela Richardson. “Typically, workers who change jobs see faster pay growth. But that premium over job-stayers shrank to 1.9 percent, matching a low we last saw in January.”

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Most of the jobs added in September came in the service-providing sector, which accounted for 101,000 jobs added. Within the sector, leisure and hospitality saw the largest gain, with 34,000 jobs added. Education and health services added 24,000 jobs while professional and business services added 20,000.

Information services shed 10,000 jobs, while financial services recorded a slight gain of 2,000 jobs.

Goods-producing firms added 26,000 construction jobs as well as 14,000 jobs in natural resources and mining. Manufacturing businesses recorded a more modest gain of 2,000 jobs.

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Service-producing companies led the way in job growth. (Photo by Joe Raedle/Getty Images / Getty Images)

Large establishments with at least 500 employees accounted for 86,000 of September’s job gains. Medium-sized firms with between 50 and 499 employees added another 64,000 jobs. Small businesses with fewer than 50 employees shed 8,000 jobs in September.

The ADP report’s regional breakdown found that the majority of the job growth occurred in the South, where 61,000 jobs were added. The Northeast added 32,000 jobs – 25,000 of which were in the mid-Atlantic – while the Midwest gained 26,000. The West added 22,000, of which 21,000 occurred in the Pacific region.

“So far, this week’s labor market data has been more resilient than many analysts had expected,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. “Like yesterday’s job openings total, today’s ADP employment number surprised to the upside, suggesting the labor market is bending but not breaking. But Friday’s monthly jobs report will have the final word on the current jobs picture, and more than likely, on near-term market sentiment.”

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The ADP report comes ahead of the Labor Department’s jobs report on Friday. (Photo by Spencer Platt/Getty Images / Getty Images)

ADP’s report precedes the more closely watched jobs report from the Labor Department, which is due to be released Friday morning and is expected to show that employers hired 140,000 workers in September and that the unemployment rate held steady at 4.2%.

The jobs report comes two weeks after the Federal Reserve announced its first interest rate cut since 2020 amid progress in curbing inflation, which has trended closer to the central bank’s 2% target rate. The 50-basis-point cut lowered the benchmark federal funds rate to a range of 4.75% to 5%.

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Fed Chair Jerome Powell emphasized that policymakers will make decisions on a meeting-by-meeting basis going forward based on economic data, saying they can cut rates faster or slower or keep them steady depending on economic conditions.