Job growth in the private sector slowed sharply in August, coming in below economists’ expectations and hinting at a cooling labor market.
The private sector added only 177,000 jobs in August, according to the latest ADP National Employment report released Wednesday. This marks a significant drop from July’s numbers, which ADP revised upward to 371,000.
Economists surveyed by Reuters had anticipated a 195,000 increase in private employment, while those polled by Dow Jones had forecast a 200,000 increase, according to CNBC.
“This month’s numbers are consistent with the pace of job creation before the pandemic,” said Nela Richardson, the chief economist with ADP, in a statement.
“After two years of exceptional gains tied to the recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede,” Richardson added.
The ADP report pointed to a significant dip in hiring in the leisure and hospitality industry for August’s slowdown. The industry added just 30,000 jobs this month, compared to 201,000 in July.
The education and health services industry saw the most growth in August, adding 52,000 jobs, followed by trade, transportation and utilities with 45,000 new jobs.
The sharp slowdown in private sector hiring is the latest indication that the labor market could finally be cooling, after remaining unexpectedly resilient to the Federal Reserve’s repeated interest rate hikes.
The Fed has raised interest rates 11 times since early 2022 as it attempts to bring inflation down to its 2-percent target. Inflation skyrocketed last year, reaching a 40-year high of 9.1 percent last June, before easing in recent months.