Private sector job growth cools sharply in September to slowest pace since 2021: ADP
Job growth cools much faster than expected in September, ADP report shows
Could we see an ugly turn of events in the jobs market?
FreedomWorks senior economist Steve Moore provides insight on the state of the economy on 'Making Money.'
Hiring by U.S. companies slowed more than expected in September, pointing to a labor market that is starting to cool in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.
Companies added 89,000 jobs last month, below the 153,000 gain that economists surveyed by Refinitiv predicted. That is also much lower than the revised 180,000 increase recorded in August.
It marked the worst month for job creation since January 2021.
"We are seeing a steepening decline in jobs this month," said Nela Richardson, ADP chief economist. "Additionally, we are seeing a steady decline in wages in the past 12 months."
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Attendees at a career fair at a community college in Bolivia, North Carolina, on April 20, 2023. (Photographer: Allison Joyce/Bloomberg via Getty Images / Getty Images)
The weaker-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has hiked rates to the highest level since 2001. Fed officials, including Chair Jerome Powell, have opened the door to at least one more hike this year – and have signaled that rates will remain elevated for longer as they assess whether high inflation has retreated for good.
In a potentially welcoming sign for the Fed as it tries to wrangle inflation under control, wages continued to moderate in September.
Annual pay rose 5.9% last month, the 12th straight month of slowing growth, according to the report. For workers who switched jobs, wages climbed 9%, down from 9.7% the previous month.
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Construction workers on a job site on March 10, 2023, in Miami, Florida. ((Photo by Joe Raedle/Getty Images) / Getty Images)
The leisure and hospitality industry drove the bulk of the job gains last month, adding 92,000 new employees. That helped to offset some notable losses in professional and business services, trade, transportation and utilities and manufacturing.
By size, small businesses led the way in hiring last month, onboarding 95,000 new workers. Medium businesses that employ between 50 and 249 workers increased by 72,000. Large businesses that employ more than 500 workers, however, shed 83,000 employees in September.
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The data precedes the release of the more closely watched September jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 170,000 workers following a gain of 187,000 in August. The unemployment rate is expected to tick down to 3.7%.
ADP numbers can differ drastically from the official government count, and have historically been an unreliable indicator of what's to come.
"Traders should proceed with caution," said Jeffrey Roach, chief economist at LPL Financial. "That said, momentum within the labor market is slowing across the board in both goods-producing and services-producing businesses."