US companies added just 132,000 jobs in August as hiring slowed: ADP

Private payroll Job growth slowed significantly In August, indicating that companies are pulling back on hiring amid growing fears of an economic slowdown, according to the ADP’s national employment report released Wednesday morning.

Companies added just 132,000 jobs last month, sharply outstripping the 288,000-job gains expected by economists surveyed by Refinitiv. This is also down from the 270,000 increase recorded in July and the lowest since May, when employers hired just 128,000 workers.

“Our data points to a shift towards a more conservative pace of employment, possibly as companies try to decipher the conflicting signals for the economy,” said Nella Richardson, ADP’s chief economist. “We could be at an inflection point, from a highly charged job gain to something more natural.”

The slowdown in hiring was largely caused by small businesses, with companies with fewer than 19 workers seeing a 47,000 drop in salaries in the last month. However, companies with 20 to 49 employees saw a 72,000 increase in hiring.

The Federal Reserve raises interest rates by 75 basis points in another historic move to tackle inflation

This is partly because a file Hottest inflation in 40 yearscombined with persistent labor shortages and the high cost of attracting new employees, has made it difficult for small business owners to maintain their bottom line and retain workers.

Large companies with 500 workers or more helped offset the decline, hiring 54,000 new workers last month. Meanwhile, mid-sized firms saw a 53,000 rise in job postings.

Service-providing industries added 110,000 new jobs last month, with the largest increases in leisure and hospitality (96,000) and commerce, transportation and utilities (54,000). Employment in the education and health services sector decreased by 15 thousand, while the financial activities sector lost 20 thousand jobs.

Meanwhile, goods-producing industries saw a salary increase of 23,000, with the bulk of the gains in construction (21,000).

The ADP report has been paused for two months as a file The company reformulated the methodology to obtain job data and began collaborating with the Digital Economy Lab at Stanford. The changes are largely technical, with the ADP previously facing criticism for its struggle to accurately predict the number of workers in the Labor Department’s closely watched jobs report.

But the report now includes data on wages, which showed annual wages rose 7.6% in August — a worrying development as consumers continue to grapple with the hottest inflation in nearly four decades.

Recruiters talk with job seekers during the Miami-Dade County Careers Fair in Miami, Florida, on December 16, 2021. (Eva Marie Ozkategwi/Bloomberg via Getty Images/Getty Images)

The Federal Reserve responded to the inflation crisis and an extremely tight labor market by raising interest rates at the fastest pace in decades. Officials agreed to two consecutive rate hikes of 75 basis points in June and July and indicated that volume was on the table in September.

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The data precedes the release of a closely watched August jobs report on Friday morning, which is expected to show employers employed 300,000 workers after an increase of 528,000 in July. The unemployment rate is expected to remain steady at 3.5%, the lowest level since the pandemic began two years ago.