Huntington Private Bank chief economist Olu Omodunbi says the jobs report shows a slowdown in the labor market in ‘The Claman Countdown.’
Hiring at U.S. companies slowed more than expected in July, indicating a labor market that continues to cool in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.
Companies added 122,000 jobs Last month, the increase of 150,000 predicted by economists surveyed by LSEG was not achieved.
At the same time, the report showed that wage growth – a key driver of inflation – fell slightly to 4.8%, the slowest pace of growth in three years. For workers who changed jobs, wages rose 7.2%, down from the 7.7% increase recorded in June.
“With wage growth slowing, the labor market is following the Federal Reserve’s lead in its effort to curb inflation,” said Nela Richardson, chief economist at ADP. “If inflation does rise again, it won’t be the labor market’s fault.”
WHITE-COLAR WORKERS ARE STRUGGLING TO FIND JOBS AS LABOR MARKET SLOWS
Job growth was concentrated almost entirely in the service sector, with goods producers contributing just 3,000 jobs to the total. (Paul Bersebach/MediaNews Group/Orange County Register via / /JOBs Apply News/Getty Images)
Employment growth was heavily concentrated in the service sector, with goods producers contributing just 37,000 jobs to the total.
Trade, transportation and utilities accounted for most of the gains, with 61,000 new jobs. Construction followed, with a payroll increase of 39,000. However, job growth beyond that sector was mostly anemic. Leisure and hospitality added 24,000 jobs, followed by education and health services, with 22,000, and financial activities, with 14,000.
THE NUMBER OF HIGH-PAYING JOBS IS DECREASING
There were also sectors that suffered notable declines last month. Professional and business services lost 37,000 jobs, while the information sector lost 18,000 and manufacturing 4,000.
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The weaker-than-expected report comes on the heels of an aggressive tightening campaign by the Federal Reserve, which has sharply raised interest rates in 2022 and 2023. Wall Street is closely watching the labor market for signs that it is finally cooling off, so the Fed can pivot and cut interest rates.
Central bank officials have indicated that rate cuts will begin later this year amid signs that inflation is cooling.
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The data precedes the release of the Labor Department’s July jobs report, which will be more closely watched on Friday morning and is expected to show that employers hired 175,000 workers, after a rise of 206,000 in JuneThe unemployment rate is expected to remain stable at 4.1%.
ADP figures can differ dramatically from the government’s official count and have historically been an unreliable indicator of what’s to come.
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