The U.S. private sector added fewer jobs than expected in August as the labor market continued to cool off amid high interest rates, according to the ADP National Employment Report released Thursday morning.
Companies added 99,000 jobs in August — fewer than the 145,000 gain predicted by LSEG economists and the fewest number of jobs added in the report since January 2021. The report also revised July’s gains downward to 111,000 after the initial report found 122,000 jobs added.
ADP found that workers’ pay gains, which can contribute to driving inflation, were flat in August — remaining at 4.8% for workers who stayed in their jobs and 7.3% for those who changed jobs.
“The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth,” said ADP chief economist Nela Richardson. “The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”
US JOB OPENINGS FALL TO LOWEST LEVEL SINCE JANUARY 2021
Most of the 99,000 jobs added by private sector employers in August were in the service industry, which accounted for 72,000 jobs added. Within the service sector, education and health services saw the largest gain with 29,000 jobs. Financial services added 18,000 jobs, while trade, transportation and utilities added 14,000.
Professional and business services shed 16,000 jobs, while information services lost 4,000 jobs.
Goods-producing firms added 27,000 jobs in the construction sector, while a gain of 8,000 in natural resources and mining was offset by a loss of 8,000 manufacturing jobs.
CONSUMER CONFIDENCE REACHES SIX-MONTH HIGH, BUT LABOR MARKET WORRIES RISE
Medium-sized businesses with between 50 and 499 employees saw the most job growth in August, adding 68,000 jobs. Businesses with more than 500 employees added 42,000 jobs. Those with fewer than 50 employees shed 9,000 jobs last month.
The ADP report’s regional breakdown found that the majority of the job growth occurred in the South, where 55,000 jobs were added. The Northeast gained 24,000 jobs, with the mid-Atlantic’s gain of 30,000 jobs partially offsetting the loss of 6,000 jobs in New England.
The West added 20,000 jobs, with 12,000 in the Pacific and 8,000 in the Mountain region. The Midwest added 7,000 jobs.
US IS SHIFTING FROM A ‘DEGREE-CENTRIC ECONOMY TO A SKILL-CENTRIC ECONOMY,’ EXPERTS SAY
ADP’s report precedes the more closely watched jobs report from the U.S. Department of Labor, which is due to be released Friday morning and is expected to show that employers hired 160,000 workers in August, with the unemployment rate falling slightly to 4.2%. Last month’s release showed that job growth slowed to 114,000 in July, while the unemployment rate unexpectedly ticked up to 4.3%.
The jobs report comes as the Federal Reserve is expected to announce an interest rate cut at its meeting this month amid signs that inflation is trending toward the central bank’s 2% target and signs of a cooling labor market.
The U.S. Department of Labor also released a report on Thursday that found the number of Americans filing new unemployment claims last week totaled 227,000 — just below the 230,000 predicted by LSEG economists.
Last week’s jobless claims were revised up by 1,000 from 231,000 to 232,000.
Read the full article here