U.S. private sector hiring slowed sharply in August, with just 54,000 jobs added, according to data released by ADP on Thursday. Economists had expected 75,000 new roles.
The gain marks a steep decline from July’s revised total of 106,000 jobs, suggesting momentum in the labor market is weakening. The slowdown raises concerns about economic growth.
ADP chief economist Nela Richardson said, “The year started with strong job growth, but that momentum has been whipsawed by uncertainty.” She noted consumer concerns and labor shortages as contributing factors.
Richardson also highlighted disruptions related to artificial intelligence, which may be reshaping hiring trends and slowing overall job creation in certain industries.
Trade, transportation, and utility sectors were particularly weak, losing 17,000 jobs in August, according to ADP. Education and health services declined by 12,000 roles.
Leisure and hospitality offset some losses, adding 50,000 jobs as seasonal demand and tourism helped boost employment in those areas.
Wage growth remained steady. Employees staying in their current roles saw a 4.4% increase in pay year-over-year, while those changing jobs recorded a 7.1% rise during the same period.
The report comes amid other troubling signals. Weekly jobless claims rose to 237,000, above estimates, reflecting potential cooling in the labor market.
Government data also showed that job openings hit levels rarely seen since 2020, indicating weaker demand for workers across sectors.
Attention now turns to the official government jobs report due Friday. Economists predict 75,000 nonfarm payrolls added in August, with the unemployment rate inching up to 4.3% from 4.2%.
Market expectations show rising bets on a Federal Reserve rate cut later this month. CME FedWatch tool currently shows a 97.4% chance of a rate reduction at the September meeting.
Analysts say the ADP report strengthens expectations that the Federal Reserve may ease monetary policy to support economic growth if hiring trends remain weak, according to nbcnews.
