U.S. Companies Add Fewest Jobs Since 2021
Private payrolls increased 99,000 in August, and the prior month’s jobs gain was revised lower.
Last month, U.S. companies added the fewest jobs since the start of 2021, adding to evidence that the labor market is shifting into a lower gear.
Private payrolls increased 99,000 in August, and the prior month’s gain was revised lower, according to the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The latest figure was below all estimates in a Bloomberg survey of economists.
Wage growth for workers who changed jobs, as well as for those who stayed in their current position, continued to advance at the slowest pace since 2021, the data out Thursday showed.
“The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth,” said Nela Richardson, chief economist at ADP. ”The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”
Another report from the Labor Department showed initial applications for unemployment benefits declined last week to the lowest level since early July. Continuing claims retreated to a nearly three-month low.
Hesitant to dismiss workers outright, companies are scaling back hiring as they contend with high costs and elevated interest rates. The latest private payrolls data adds to evidence of moderating labor demand that can help to further tamp down price pressures.
Federal Reserve officials say they’re now more concerned about risks to the labor market than inflation. With price pressures largely down from their pandemic peak, policymakers are expected to start cutting interest rates this month.
The ADP report showed payrolls fell in professional and business services, manufacturing, and information. More than half of the August increase was in the construction, education, and health-services sectors. Firms with at least 500 employees added the fewest jobs since the start of the year.
A separate report Thursday from Challenger, Gray & Christmas Inc. showed hiring plans at U.S. companies this year through August fell 41 percent from the same eight-month period in 2023. Announced job cuts were down 3.7 percent.
ADP bases its findings on payroll data covering more than 25 million U.S. private-sector employees.
Economists expect the Bureau of Labor Statistics’ (BLS’s) monthly employment report on Friday, which includes payrolls counts from the private and public sectors, to show a moderate pickup in the pace of job growth. The median projection for a 165,000 gain in August payrolls would follow one of the weakest months of hiring since the pandemic.
“If ADP’s number accurately foreshadows the payrolls increase we will see tomorrow—this is not always the cas—then the unemployment rate will rise and the BLS statistics will show a looser labor market,” High Frequency Economics’ Carl Weinberg and Rubeela Farooqi said in a note. “That is not what the Fed wants to see.”
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