US to create fewest jobs since early 2021, ADP Data Show
US companies increased their workforce at a relatively slow pace in August, according to a revised private report that suggests hiring is falling in an economy battered by high inflation and rising interest rates.
Corporate payrolls rose 132,000 this month, the smallest increase since early 2021, after rising nearly 270,000 in July, according to newly compiled data from the ADP Research Institute in partnership with the Stanford Digital Economy Lab. The latest report released on Wednesday reflects the updated methodology and includes historical job data on a monthly and weekly basis for the last 12 years.
The median forecast from a Bloomberg survey of economists called for a 300,000 rise in private employment.
“Our data points to a shift towards a more conservative pace of hiring, possibly as companies try to decode the economy’s conflicting signals,” Nela Richardson, chief economist at ADP, said in a statement. “We could be at a tipping point, from supercharged job wins to something more normal.”
The figures, based on payslips from more than 25 million US workers, provide a supplemental look at labor market conditions ahead of the government’s monthly jobs report. Economists will likely consider the ADP data along with a range of other jobs indicators when determining how much the Federal Reserve’s rapid pace of monetary tightening is affecting the health of the broader job market.
In June, ADP announced it would be working with the Stanford Digital Economy Lab to overhaul the report’s methodology to “provide a more robust, high-frequency view of the labor market and the trajectory of economic growth.” The report has been paused since the May report.
Wage increases were concentrated in leisure and hospitality, trade, transport and utilities, and construction. Employers cut jobs in finance, information, business services, and education and health services. Employment growth was strongest in the south and west.
The government’s monthly jobs report on Friday is expected to show an increase in US personal payrolls of about 300,000 in August, according to the median estimate from a Bloomberg poll of economists. The unemployment rate is expected to remain at 3.5%, a 50-year low.
ADP has stressed that its new approach to the data moves away from trying to predict government payroll numbers. However, the July ADP estimate points to a more moderate pace of hiring than the Labor Department’s payslips showed earlier this month.
The report also includes new insights into wage growth. Those who changed jobs experienced a 16.1% pay increase as of August 2021, more than double the 7.6% increase for those who stayed in their jobs.
By industry, workers in leisure and hospitality, trade, transport and utilities saw the strongest annual wage growth. Women saw slightly faster wage increases than men.
The report also showed that those working at larger companies saw faster wage growth — 8.3% compared to 5.4% at companies with fewer than 20 employees.
Reade Pickert reports for Bloomberg News.
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