NEW YORK (TheStreet) -- October was a good month for hiring, as private companies added new workers in the places where the economy needs them most.
Private employers added 230,000 workers last month, payroll processor ADP (ADP) reported Wednesday. But in this case it's the angel that's in the details. The best part of the performance, which matched economists' consensus forecasts, is that hiring was so heavy in industries that are essential to helping the economy reach a near-full employment rate of 5.5% by the end of the year.
Watch the video below for more on the latest ADP figures:
Construction companies added 28,000 workers, while manufacturers hired a net 15,000 workers. Small companies added 102,000, medium-sized businesses hired 122,000 and companies with more than 500 employees (such as Apple (AAPL) , Walmart (WMT) , and Exxon Mobil (XOM) ) hired 5,000. The overall number was near the middle of the last 12 months of ADP data, which have seen employers add as few as 191,000 jobs and as many as 297,000, other than an unusually weak performance during January's polar vortex.
"Job growth is strong, I'd say very strong,'' said Mark Zandi, chief economist of Moody's Analytics, which conducts the survey for ADP. "At the current pace of job growth, the unemployment and underemployment rates are declining a percentage point per annum. We're going to see very rapid declines in the amount of labor force slack."
If the job gains in Friday's official report on hiring and unemployment are as strong as ADP's findings, the unemployment rate would fall to 5.8% barring an increase in the size of the labor force.
Europe's recent problems have had almost no effect on the economy, Zandi said. Exports account for only about 12% to 13% of the U.S. economy, and only 20% of that goes to European Union nations, he said.
"They [employers] are looking past it.,'' he said. "Multiply point 12 by point two and it's a very small number."
For investors, the report has two main takeaways:
First, hiring is on the same steady, relatively high pace it has been on for the last year. The consistent pace of growth between 190,000 and 250,000 jobs, with only rare deviations, is the longest such run since the late 1990s, and reflects rising corporate profits and high recent readings in business and consumer confidence. It could accelerate more if housing construction picks up, Zandi said.
Second, Zandi said the report still points to the Federal Reserve being slow to begin raising interest rates. He said ADP's recent data have picked up a distinct acceleration in base wages, but inflation-adjusted median incomes remain about 4% below their prerecession peak and even further below their late-1990s peak. The economy will need until 2016 to create full-time jobs for people who are working part-time for economic reasons or have left the work force and want to return, he added, another reason for the Fed to keep rates low.
The Fed is likely to be willing to risk slightly more inflation as it keeps stimulating the recovery in hopes of getting wages to rise faster, Zandi said. The central bank's preferred inflation measure has risen by 1.48% in the last 12 months, well below the 2% target set by Fed Chair Janet Yellen and her colleagues.
At the time of publication, the author held no positions in stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.