The American labor market is demonstrating remarkable resilience, as evidenced by the latest employment report from Automatic Data Processing Inc. (NASDAQ:ADP). In July, the pace of new job growth experienced a modest decline, dropping from almost half a million new jobs in June to 324,000, still significantly surpassing economist expectations of 189,000 new employees.
The ADP employment data serves as a preview for the eagerly awaited jobs report on Friday, with economists expecting a drop in non-farm payrolls to 200,000 in July, a stable unemployment rate at 3.6% and a cooling of annual wage growth rate to 4.2%.
U.S. private businesses added 324,000 new employees in July, less than the downwardly revised 455,000 figure from June, but well above the expected 189,000.
“The economy is doing better than expected and a healthy labor market continues to support household spending. We continue to see a slowdown in pay growth without broad-based job loss,” said Nela Richardson, ADP’s chief economist.
The growth in employment primarily stemmed from small and midsize companies, which added 237,000 and 138,000 jobs, respectively. In contrast, large companies reported a decline of 67,000 jobs.
Leisure and hospitality were again the biggest drivers of job creation, adding 201,000 new employees. Employment losses were recorded in manufacturing, down 36,000, and financial activities, down 5,000.
Pay growth extended its downward trend in July. Job stayers saw an annual increase of 6.2%, the slowest pace of gains since November 2021. For job changers, pay growth slowed to 10.2%.
Traders adjusted their expectations for interest rate hikes downward, partly influenced by Fitch’s downgrade of the United States’ long-term foreign currency issuer default rating from AAA to AA+.
“Part of what we’re doing is investing in training so that we have skilled tradespeople,” said Celeste Drake, a senior White House labor adviser,
The market-implied probability of a rate hike in September narrowed to 15% and the likelihood of a rate hike by November eased to 27%.
Stocks exhibited volatility on Wednesday, with S&P 500 futures trading in negative territory. On the first trading day of the month, Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) declined by 0.3%.
“The share of working-age Americans in the workforce is as high as it’s been in 20 years, and higher than every single day my predecessor was president,” said President Joe Biden
Produced in association with Benzinga
