New data from ADP released Thursday showed the private sector added its fewest jobs in a month since January 2021, signaling a cooling labor market.
ADP’s National Employment Report for August showed 99,000 jobs were added in the month, well below economists estimates for 145,00 and fewer than the 122,000 jobs added in July. The August data marked the fifth straight month payroll additions had slowed from the month prior.
“The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth,” ADP chief economist Nela Richardson said in the release. “The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”
The data comes as investors watch for signs of how quickly the Federal Reserve could bring down interest rates as inflation eases. A slowdown in the job market has moved into focus as a key factor for consideration.
In a speech in late August, Fed Chair Jerome Powell said the cooling in the labor market has been “unmistakeable.” Powell added the downside risks to the central bank’s mandate for full employment have risen.
“It seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon,” Powell said. “We do not seek or welcome further cooling in labor market conditions.”
More signs of a slowing labor market were seen in a data release Wednesday from the Bureau of Labor Statistics. The Job Openings and Labor Turnover Survey (JOLTS) showed there were 7.67 million jobs open at the end of July, a decrease from the 7.91 million seen in June. This marked the lowest number of job openings since January 2021.
Also in the report: the ratio of unemployed workers to job openings fell to 1.07 in July, below the average seen in 2019 before the pandemic disrupted the labor market and about in line with data from April 2018.
Renaissance Macro’s head of economic research Neil Dutta wrote on X that the decline in the ratio is “yet another sign that labor demand has cooled, going a bit beyond where we were just before the pandemic.”
A more comprehensive look at the labor market will come on Friday with the August jobs report.
Consensus expectations among economists surveyed by Bloomberg project the US economy added 165,000 jobs in August while the unemployment rate ticked down to 4.2%. This would mark the first decrease in the unemployment rate since March.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
From: Yahoo.com
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