U.S. companies increased headcount at a relatively sluggish pace in August, according to a revamped private report that suggests hiring is downshifting in an economy buffeted by high inflation and rising interest rates.
Businesses’ payrolls rose 132,000 this month after a nearly 270,000 gain in July, according to newly compiled data from ADP Research Institute in collaboration with Stanford Digital Economy Lab. The latest report reflects updated methodology.
The median forecast in a Bloomberg survey of economists called for a 300,000 gain in private employment.
The figures, which are based on payroll transactions of more than 25 million U.S. workers, offer a supplementary view of labor market conditions ahead of the government’s monthly jobs report. Economists will likely take ADP’s data into account, along with a slew of other labor market indicators, when determining to what extent the Federal Reserve’s rapid pace of monetary tightening is impacting the health of the broader jobs market.
In June, ADP announced that it would be teaming up with the Stanford Digital Economy Lab to retool the report’s methodology to “provide a more robust, high-frequency view of the labor market and trajectory of economic growth.” The report has been on pause since the May report.
“Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals,” Nela Richardson, chief economist at ADP, said in a statement. “We could be at an inflection point, from super-charged job gains to something more normal.”
Payrolls gains were concentrated in leisure and hospitality, trade, transportation and utilities, as well as construction. Employers cut jobs in finance, information, business services and education and health services.
The government’s monthly jobs report Friday is anticipated to show U.S. private payrolls climbing about 300,000 in August, according to the median estimate in a Bloomberg survey of economists. The unemployment rate is forecast to hold at 3.5%, matching a 50-year low.
The report also includes fresh insights into wage growth. Those who changed jobs experienced a 16.1% pay increase from August 2021, more than twice the 7.6% gain for those who stayed at their job.
