Olu Omodunbi, chief economist at Huntington Private Bank, said on “The Craman Countdown” that the jobs report points to a slowdown in the labor market.
U.S. companies started hiring more slowly than expected in July, according to the ADP national employment report released Wednesday morning, signaling that the labor market continues to cool on the back of rising interest rates.
The company created 122,000 jobs Last month it fell short of the 150,000 increase predicted by economists surveyed by LSEG.
At the same time, the report showed that wage growth, the main driver of inflation, fell slightly to 4.8%, the slowest pace in three years. Wages for workers who changed jobs rose 7.2%, down from a 7.7% increase in June.
“With wage growth slowing, the labor market is aligning with the Fed’s efforts to keep inflation in check,” said Nella Richardson, chief economist at ADP. “If inflation does rise again, it won’t be because of labor.”
White-collar workers struggling to find work as labor market slows
Job growth was almost entirely concentrated in the services sector, with goods producers contributing just 3,000 jobs in total. (Paul Barsebach/Media News Group/Orange County Register/via Getty Images)
Job growth was heavily concentrated in the services sector, with goods producers adding just 37,000 jobs in total.
Most of the growth was in trade, transport and public works, which added 61,000 new jobs. Construction followed with an increase of 39,000 jobs, but job gains outside of this industry were generally weak. Leisure and hospitality added 24,000 jobs, education and health services added 22,000, and financial services added 14,000.
The number of high-paying jobs is declining
Some sectors saw notable declines last month: professional and business services cut 37,000 jobs, information sector lost 18,000 jobs and manufacturing lost 4,000 jobs.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 40743.33 | +203.40 |
+0.50% |
| I:Comp | Nasdaq Composite Index | 17147.416713 | -222.78 |
-1.28% |
| SP500 | S&P 500 | 5436.44 | -27.10 |
-0.50% |
The weaker-than-expected report Federal Reservehas raised interest rates sharply in 2022 and 2023. Wall Street is watching closely for signs that the labor market is finally cooling off and that the Fed could reverse course and start cutting interest rates.
Central bank officials have signaled they will start cutting interest rates later this year amid signs that inflation is slowing.
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The data comes ahead of the Labor Department’s highly-anticipated July jobs report on Friday morning, which is expected to show employers added 175,000 workers, an increase of 145,000 from a year ago. 206,000 in JuneThe unemployment rate is expected to remain stable at 4.1%.
ADP figures can differ significantly from official government statistics and have historically been unreliable as a predictor of the future.
