The U.S. labor market is showing signs of cooling as the latest data show the slowest job growth in nearly three years.
U.S. companies added just 99,000 new jobs in August, the slowest monthly gain since the start of 2021, according to ADP's “small nonfarm” data.
That figure fell short of all economists' expectations and reinforced the idea that the labor market is moving into a period of slower growth.
Revised figures for July also showed a downward correction, suggesting that hiring has consistently underperformed in recent months. “After two years of significant growth, a downward trend in the labor market has kept hiring below normal levels,” said ADP chief economist Nela Richardson. “Wage growth is stabilizing after slowing sharply in the wake of the pandemic.”
However, the actual employment data will be released today at 15:30 (UTC+3) and the expectation was recorded as 164,000.
Rising costs and higher interest rates are forcing companies to scale back hiring efforts. The new data highlights growing concern among Fed officials, who are increasingly focused on labor market risks rather than inflation. With inflationary pressures easing from pandemic peaks, many market watchers expect the Fed to begin cutting rates as early as this month.
Adding to the labor market challenges, a separate report released Thursday showed U.S. companies’ hiring plans for the year to August 2024 were 41% lower than the same period in 2023. Announced layoffs, however, fell by 3.7%, painting a mixed picture of labor demand and companies’ cost-cutting efforts.
*This is not investment advice.