US companies in August added the fewest jobs in five months, a private report showed, adding to signs of moderating labor demand.
(Bloomberg) — US companies in August added the fewest jobs in five months, a private report showed, adding to signs of moderating labor demand.
Private payrolls rose by 177,000 in August following an upwardly revised 371,000 increase in the prior month, according to figures published Wednesday by the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The median estimate in a Bloomberg survey of economists called for a 195,000 advance.
Hiring in leisure and hospitality, a main driver of growth during the pandemic recovery, was the slowest since March 2022. But despite the slowdown, no sector shed jobs, and the largest gains were in education and health services, as well as trade and transportation.
The figures, on the heels of a decline in job openings, illustrate a labor market that is gradually downshifting. Though many employers are reluctant to shed jobs, some are scaling back hiring while others are cutting hours to reduce costs.
With the supply and demand for labor coming more into balance, workers are seeing some of their pandemic-ignited bargaining leverage fade away. Americans’ views on the labor market are souring and fewer are voluntarily leaving their job.
Those dynamics are contributing to a slowdown in wage growth. Workers who stayed in their job saw a 5.9% median pay increase in August from a year ago, the smallest advance since 2021. For those who changed jobs, the median rise in annual pay was 9.5%.
“After two years of exceptional gains tied to the recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede,” Nela Richardson, ADP’s chief economist, said in a statement.
A government report due Friday will provide further insights into the direction the labor market is headed. While it’s currently forecast to show the US added the fewest jobs since the end of 2020 in August, that would still mark a healthy pace of payroll growth.
A separate report on Wednesday showed that second-quarter gross domestic product accelerated at a slower pace than the government previously estimated. Still, the revised 2.1% annualized advance reinforces a picture of a resilient economy that’s showing signs of picking up steam.
–With assistance from Jordan Yadoo and Reade Pickert.
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