In August, job growth in the private sector experienced a significant slowdown, falling below economists’ expectations and indicating a cooling labor market.
The latest ADP National Employment report, released on Wednesday, reveals that the private sector only added 177,000 jobs in August, a notable decline from the revised upward figure of 371,000 in July.
Economists surveyed by Reuters had predicted a 195,000 increase in private employment while those polled by Dow Jones anticipated a 200,000 increase, according to CNBC.
“This month’s numbers align with the pace of job creation prior to the pandemic,” said Nela Richardson, ADP’s chief economist, in a statement.
“After the exceptional gains during the recovery, we are now transitioning to a more sustainable growth in pay and employment as the effects of the pandemic subside,” Richardson added.
The ADP report highlights a significant decline in hiring within the leisure and hospitality industry, which only added 30,000 jobs in August compared to 201,000 in July.
The education and health services industry experienced the most growth in August, adding 52,000 jobs, followed by trade, transportation, and utilities with 45,000 new jobs.
This sharp slowdown in private sector hiring is the latest indication that the labor market may finally be cooling off, despite its surprising resilience to the Federal Reserve’s repeated interest rate hikes.
The Federal Reserve has raised interest rates 11 times since early 2022, aiming to bring inflation down to its 2-percent target. Inflation skyrocketed last year, reaching a 40-year high of 9.1 percent in June, before gradually easing in recent months.
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