Companies sharply slowed the pace of hiring in August amid growing fears of an economic slowdown, according to payroll processing company ADP.
Private payrolls grew by just 132,000 for the month, a deceleration from the 270,000 gain in July, the firm said in its monthly payroll report.
The Dow Jones estimate for the ADP count was 300,000. The report had been on public hiatus through the latter part of the summer as the firm adjusted methodology and entered into a partnership with the Stanford Digital Economy Lab.
“Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals,” said ADP chief economist Nela Richardson. “We could be at an inflection point, from super-charged job gains to something more normal.”
August payroll numbers are notoriously volatile. ADP’s release also comes at an uncertain time for a U.S. economy which saw negative growth for the first half of 2023 amid the highest inflation the nation has seen since the early 1980s. The more closely watched nonfarm payrolls report from the Bureau of Labor Statistics comes out Friday and is expected to show an increase of 318,000.
In addition to the changes in the way the jobs total is counted, ADP now is providing wage information. August’s numbers add to the inflation worries, as the firm reported annual pay up 7.6% for the month.
From a sector standpoint, services-related industries accounted for most of the jobs, with 110,000 added positions. Leisure and hospitality grew by 96,000 while seeing pay increases of 12.1%. Trade, transportation and utilities contributed 54,000.
However, several sectors saw decreases. They included financial activities (-20,000), education and health services (-15,000) and professional and business services (-14,000).
On the goods-producing side, construction added 21,000 and natural resources and mining saw a 2,000 gain. Manufacturing was flat.
From a business size perspective, companies with 500 or more employees grew by 54,000. Medium-sized businesses added 53,000 while those with fewer than 50 employees saw a 25,000 gain.