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US job openings rose to 7.523 million in September and layoffs fell to their lowest since March 2025. Automatic Data Processing and Paychex are paid per worker, so steady headcount supports their fees. Both also earn interest on client payroll money they hold before payday, which benefits from higher rates.
Source: CNBC ↗
A strong jobs report helps companies paid per worker. It can also keep interest rates higher, which benefits any company that earns interest on cash it holds for others.
Job openings rose by 333,000 to 7.523 million in September, and layoffs fell by 127,000 to their lowest since March 2025. Resignations climbed to 3.365 million, the most since March 2025. The Bureau of Labor Statistics called the change in openings statistically little changed. Automatic Data Processing (ADP) and Paychex (PAYX) charge clients for each employee they pay, so steady headcount supports their fees. Both also hold client cash briefly before paychecks go out and earn interest on it. ADP expects between $1.59 billion and $1.61 billion of such interest this fiscal year. A firm job market gives the Federal Reserve less reason to cut rates, which helps that interest income. ADP called the labor market 'low hire, low fire' when it raised its outlook on October 28.
Automatic Data Processing (ADP) shares fell 0.9% on November 3 and Paychex (PAYX) shares rose 0.1%, so payroll processors barely moved on the day. Paychex had risen 5.8% over the five trading days to November 3.
September could turn out to be a one-month swing rather than lasting hiring demand. The October payrolls report on Friday, November 6, will be the first test; economists expect about 55,000 jobs after September's 29,000. Weak job gains there, or a falling 2-year Treasury yield as traders expect Fed cuts, would undercut both links.
A job market this tight cuts both ways. Fewer layoffs mean fewer of the new businesses that bring payroll processors new clients. Higher rates can also squeeze the small businesses that make up Paychex's clients, which could slow their hiring. If inflation keeps rates high while growth stalls, headcount could flatten even as interest income holds up.
Employers posted more open jobs in September and let fewer people go than at any point since March 2025. More workers also quit, which usually happens when people feel sure they can find something better. So companies are keeping and adding staff, not cutting.
When jobs are plentiful and prices are still rising, the Fed has little reason to lower interest rates. Consumer prices were up 3.7% on a year earlier in September, well above the Fed's comfort zone. That's why a strong jobs report tends to keep rates higher for longer.
Payroll companies like Automatic Data Processing (ADP) and Paychex (PAYX) charge for every worker they pay, so more people on payrolls means more fees. Both also hold client money for a few days before payday and earn interest on it. It works like a tenant's deposit that a landlord keeps in a savings account, so higher rates make that money earn more.
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