A ‘Help Wanted’ sign is displayed in the window of a store in Manhattan on December 02, 2022 in New York City.
Spencer Platt | Good pictures
According to ADP, job creation in the U.S. fell more than expected in August, a sign that the surprisingly resilient U.S. economy is starting to ease under the pressure of higher interest rates.
Private employers on Wednesday said they added 177,000 jobs in August, well below the revised total of 371,000 jobs added in July. Economists polled by Dow Jones expected 200,000 jobs to be added in August.
ADP reported that wage growth slowed for workers who changed jobs and for those in their current positions.
“This month’s numbers are consistent with the pace of job creation prior to the pandemic,” Nela Richardson, ADP’s chief economist, said in a press release. “After two years of exceptional gains recovery, we are moving towards more sustainable growth in wages and employment as the economic effects of the pandemic subside.”
The weaker-than-expected report comes as investors and economists are divided over whether U.S. inflation can remain at 2% without a significant slowdown in the economy. Labor market strength is a key reason why the economy grew faster than many expected in 2023.
The Federal Reserve raised rates to a 22-year high in July and Fed Chairman Jerome Powell signaled last week that the central bank is poised to raise more this year.
The ADP report is traditionally seen as a signal of what the Labor Department’s monthly jobs report will show. However, the company changed its methodology last year, making its forecasting trends clearer.
The employment report of the Labor Department is due to be released on Friday.