Private sector payrolls in August saw their slowest growth in over three and a half years, according to a report by ADP, indicating further signs of a softening labor market. Employers added just 99,000 jobs in the month, a decline from the revised 111,000 in July and well below the forecast of 140,000. This marks the smallest monthly increase in payrolls since January 2021.
ADP’s chief economist, Nela Richardson, highlighted the labor market’s ongoing deceleration, stating, “The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth.”
The data reflects a broader trend of cooling employment growth following a sharp rebound in the wake of the COVID-19 pandemic. Labor Department figures from July similarly pointed to declining job openings, which hit their lowest level since January 2021. Meanwhile, outplacement firm Challenger, Gray & Christmas reported that August saw the highest number of layoffs for the month since 2009.
While the hiring slowdown was widespread, only a few industries recorded actual job losses. Professional and business services lost 16,000 positions, manufacturing shed 8,000, and information services fell by 4,000. However, gains were noted in education and health services, which added 29,000 jobs, and construction, which saw an increase of 27,000.
On the wage front, annual pay growth for workers who remained in their jobs rose by 4.8%, maintaining the pace observed in July, though still reflecting a gradual easing from previous months’ gains.
The ADP report sets the stage for the Bureau of Labor Statistics’ more closely watched nonfarm payrolls data, due Friday. Forecasts suggest an increase of 161,000 jobs for August, though recent data raises the possibility of a weaker figure. Markets are now watching for potential Federal Reserve action, with expectations that slowing job growth could prompt rate cuts at the Fed’s September meeting.
ADP also noted a minor revision in its August data due to rebenchmarking, reflecting a reduction of 9,000 jobs.
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