According to the National Employment Report released by ADP, a U.S. payroll processing company, on Thursday, August saw the addition of 54,000 new job positions in the private sector, indicating a slowdown in the hiring market.
This figure fell below the economists’ expectations of 75,000 new positions, as surveyed by Dow Jones & Company, and significantly dropped from the revised 106,000 positions from the previous month.
Nela Richardson, Chief Economist at ADP, stated in a press release, “Employment growth was strong at the beginning of the year, but uncertainties have weakened this momentum. The slowdown in hiring may be attributed to various factors, including labor shortages, consumer confidence issues, and disruptions caused by artificial intelligence.”
Breaking it down by industry, job growth related to trade, transportation, and utilities notably weakened in August, resulting in a net decrease of 17,000 positions. Following closely, education and healthcare services saw a reduction of 12,000 job positions. Manufacturing and finance also experienced decreases of 7,000 and 2,000 employment positions, respectively.
However, the booming expansion in the leisure and hospitality industry partially offset these losses, adding 50,000 new job positions in the sector for the month, making it the largest contributing industry. The construction industry followed with 16,000 new positions.
Professional and business services saw an increase of 15,000 new positions, the information industry added 7,000, natural resources and mining sector added 4,000, and other services industry added 1,000 positions.
In terms of business size, large companies with 500 or more employees added 18,000 new job positions, medium-sized companies with 50 to 499 employees added 25,000 employees, and small companies with fewer than 50 employees added 12,000 new job positions.
Wage growth in August remained relatively flat. According to ADP data, workers who stayed in their current positions saw a 4.4% year-over-year wage increase, while those who changed jobs experienced a 7.1% wage growth during the same period.
The data from ADP indicates a slowdown in the U.S. hiring market.
The ADP Employment Report is jointly compiled by the ADP Research Institute and the Stanford Digital Economy Lab and is released before the Bureau of Labor Statistics (BLS) publishes its non-farm payroll report on Friday. Due to different statistical methods used, the data provided in these two reports can sometimes show significant differences. Although not directly related, the ADP report serves as a precursor to the government report.
On the same day as the release of the ADP report, data from the U.S. Department of Labor showed that in the week ending August 30, the number of initial claims for unemployment benefits nationwide increased by 8,000 individuals, reaching 237,000 people, surpassing economists’ previous estimate of 231,000 people.