US Private Sector Job Growth Slows, Pay Growth at Lowest Since October 2021
Private sector employment in the US experienced a slower growth rate than expected in August, with pay growth reaching its lowest point since October 2021, according to a report released by ADP, a payroll processor. The report revealed that private sector employment increased by 177,000 jobs in August, compared to an upwardly revised figure of 371,000 jobs in July. Economists had initially predicted an advance of 195,000 jobs for August, based on the previously reported jump of 324,000 jobs in the previous month. Nela Richardson, the chief economist at ADP, commented that the latest figures align with the pace of job creation before the pandemic. She noted that the economy is transitioning towards more sustainable growth in pay and employment as the impact of the pandemic recedes.
ADP’s report highlighted that the slowdown in job growth stems largely from the leisure and hospitality sector, which experienced a drop in job creation in August to 30,000 after several months of strong hiring. Additionally, the report indicated that job stayers, as well as job changers, witnessed a decrease in pay growth. Job stayers saw a year-over-year pay increase of 5.9%, the slowest growth rate since October 2021, while pay growth for job changers decelerated to 9.5%. Another significant finding from the report was that all 50 states in the US, along with Washington, D.C., experienced a slowdown in pay growth for the first time.
The ADP report reflects a shift towards more moderate job growth and pay increases in the private sector. While this may be seen as a positive development in terms of achieving sustainable growth, it also highlights potential challenges going forward. The leisure and hospitality sector, which has been severely affected by the pandemic, continues to struggle despite previous months of strong hiring. Additionally, the overall slowdown in pay growth across all states raises concerns about the broader economic recovery.
Experts believe that the data provided by ADP indicates a gradual cooling of the job market, suggesting that the pace of recovery may be easing as the economy adapts to a post-pandemic landscape. It remains to be seen how this trend will evolve in the coming months and whether it will impact consumer spending and overall economic growth.
