Hiring fell short of expectations
The August report from ADP Research and the Stanford Digital Economy Lab put hiring below economists' forecasts. A Reuters poll projected 48,000 additional jobs, while the Dow Jones and Bloomberg consensus estimates were both 47,000. ADP also raised its July estimate from 44,000 to 46,000.
The employment gains were concentrated in services. Education and health services added 45,000 jobs, leisure and hospitality added 16,000, and financial activities and other services each gained 6,000. Those increases were partly offset by losses of 16,000 in professional and business services, 5,000 in trade, transportation and utilities, and 4,000 in information.
Overall, service-providing industries gained 48,000 jobs, while goods-producing industries lost 10,000. ADP described construction hiring as solid but reported job losses in manufacturing.
The Northeast recorded a gain of 38,000 jobs, compared with 5,000 in the Midwest and 3,000 in the South. Employment in the West declined by 8,000. Large establishments added 34,000 jobs and small establishments added 3,000, while employment at medium-sized establishments was unchanged.
Expanded pay data showed a long slowdown
ADP Pay Insights reported median annual base pay growth of 3.2% across all private-sector workers and gross pay growth of 4.7%. Workers who stayed in their jobs had base pay growth of 3.0% and gross pay growth of 4.4%. For workers who changed jobs, the corresponding increases were 4.7% and 7.3%.
The August release expanded the pay report to track contracted base pay rates as well as gross pay, which includes base pay, bonuses, commissions, tips and other earnings. It also introduced combined results for job-stayers and job-changers, pay growth distribution data and an interactive platform.
The expanded data covers 56 U.S. metropolitan areas, with breakdowns by worker mobility, demographics, sector, employer size and pay quartile. The analysis matches payroll transactions for more than 14.7 million workers over 12-month periods.
Liv Wang, lead data scientist at ADP Research, said the August findings showed that pay growth had been slowing for four years. "Among lower-paid workers in particular, base pay growth has lost momentum and now is slower than it was prior to the pandemic," she said.
ADP chief economist Nela Richardson pointed to pay trends as a way to understand "today's choppy hiring." She said demographic change, persistent inflation and AI's effects on jobs had made wage growth less predictable.
The official jobs report and rate outlook
ADP's release preceded the Bureau of Labor Statistics' August employment report by two days. Reuters cautioned that ADP has historically been a poor gauge of the BLS estimate for private payrolls.
When the official report arrived on Friday, September 4, it showed that the U.S. economy had added 162,000 jobs, well above the roughly 55,000 economists expected, according to Yahoo Finance. The unemployment rate held at 4.1%.
The reports came as the Federal Reserve weighed raising interest rates to address persistent inflation. Yahoo Finance reported that inflation stood at 3.4% in July and had exceeded the central bank's 2% target for more than five years. Following the stronger-than-expected BLS report, traders increased the probability they assigned to a rate hike at the September meeting.
Fed Chairman Kevin Warsh had said in his Jackson Hole speech that prices should be the central bank's predominant focus.
Other labor-market figures included 53,000 announced layoff plans recorded by outplacement firm Challenger, Gray & Christmas in August, the lowest August total since 2022. The Labor Department's JOLTS report put July job openings at 7.3 million, little changed from the previous month.
September brought stronger hiring and an August revision
ADP's next report, released September 30, put September's private-sector employment gain at 90,000. ADP described hiring as accelerating for the first time since May, following three months of slowing growth. That release also lowered August's gain from the initially reported 38,000 to 36,000.
