According to Adam Schickling, a senior economist at Vanguard, the U.S. economy is experiencing a milder labor market this summer after more robust job growth in the spring.
In its recent report, ADP, a payroll processing company, noted that private sector companies added 38,000 jobs in August. This number falls short of economists’ expectations, which had predicted an increase of 48,000 jobs and represents a decrease from the revised count of 46,000 in the previous month. Notably, August’s job additions are the lowest since January.
“Wages can provide insight into the unpredictable hiring landscape today,” remarked Nela Richardson, ADP’s chief economist. “To grasp hiring trends, it’s essential to examine where wage growth is rising or falling, and for which groups. Predictable wage increases have been disrupted by demographic shifts, ongoing inflation, and the impact of AI on employment.”
Which industries are hiring the most workers, according to the ADP report?
The education and health services sector led in job creation, adding 45,000 positions in August. The leisure and hospitality industry contributed 16,000 jobs, while financial activities and other services each saw increases of 6,000.
On the downside, the manufacturing sector saw a decline of 17,000 jobs, and professional and business services lost 16,000 roles. Additionally, natural resources and mining, along with trade and transportation, each lost 5,000 positions, and the information sector lost 4,000 jobs.
Large companies—those with 500 or more employees—added 34,000 jobs during August. Mid-sized businesses with 50 to 499 employees saw no change in employment, while small establishments with fewer than 50 employees gained 3,000 jobs.
Employees who remained in their current positions experienced a 4.4% increase in pay compared to the previous year, while those switching jobs enjoyed an acceleration in wage gains to 7.3%.
The ADP report is released ahead of the Labor Department’s nonfarm payroll data, which is set to come out on Friday morning. Notably, this government report may differ significantly from ADP’s figures. The upcoming data is anticipated to reflect an increase of 56,000 jobs, contrasting with the unexpected loss of 23,000 jobs reported in July, while the unemployment rate is expected to hold steady at 4.1%.
