The ADP jobs report showed that only 54,000 new jobs were created in August.
The ADP National Employment Report for August showed the continued slow down of private sector job creation in the U.S.
In August, the private sector added 54,000 new jobs, well short of estimates of 75,000. While a better than expected 106,000 jobs were added in July, the private sector lost 33,000 in June and added only 37,000 in May. The four-month average is 41,000 jobs per month.
By comparison, an average of 129,000 private sector jobs per month were created over the same period a year ago.
Most of the new jobs in August were in the leisure and hospitality industry. Here’s a breakdown:
- Leisure and hospitality added 50,000 jobs
- Construction added 16,000 jobs
- Professional and business services added 15,000
- Trade, transportation and utilities lost 17,000 jobs
- Education and health services lost 12,000 jobs
- Manufacturing lost 7,000 jobs
“The year started with strong job growth, but that momentum has been whipsawed by uncertainty. A variety of things could explain the hiring slowdown, including labor shortages, skittish consumers, and AI disruptions,” Dr. Nela Richardson, chief economist at ADP, said.
Strengthens the case for Fed to cut rates
If there is a silver lining to the anemic job growth, it’s that it strengthens the argument for the Fed to lower rates on September 16-17.
We continue to see softness growing in the labor market as tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows,” Eric Teal, Chief Investment Officer at Comerica Wealth Management, said. “The silver-lining is the weaker the jobs data the more cover there is for stimulative interest rate cuts that are on the horizon. The boost in the latter half of this year should come from easier monetary policy and stimulative fiscal policies to avoid further economic deterioration.”
Fed chair Jerome Powell expressed concern over risks in the labor market in a recent speech, which could warrant a policy shift. FOMC member Christopher Waller voted for a rate cut in July due largely to labor market concerns.
“The Federal Reserve’s free pass on the labor market has ended,” Jamie Cox, managing partner for Harris Financial Group, said. “ADP data continue to reinforce the narrative that the rate of positive change in the labor market has slowed significantly, so you can expect the Fed to tilt it’s balance of risks to cut rates in September.”
The Bureau of Labor Statistics releases the August jobs report tomorrow, and economists expect only 75,000 new jobs to be created, including the public and private sectors. They also anticipate the unemployment rate to rise to 4.3%.
