September 29, 2023

Brighton Journal

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ADP says US job growth slowed sharply to 177,000 jobs in August, below expectations.

ADP says US job growth slowed sharply to 177,000 jobs in August, below expectations.

A “Help Wanted” sign is displayed in a store window in Manhattan on December 02, 2022 in New York City.

Spencer Platt | Getty Images

Job creation in the United States slowed more than expected in August, according to the ADP report, in a sign that the surprisingly resilient US economy may start to sag under pressure from rising interest rates.

The company reported on Wednesday that private sector employers added 177,000 jobs in August, far below the revised total of 371,000 jobs added in July. Economists polled by Dow Jones had expected 200,000 jobs to be added in August.

The ADP also reported that wage growth slowed for workers who changed jobs and those who stayed in their current positions.

“This month’s numbers are consistent with the pace of job creation before the pandemic,” said Nella Richardson, chief economist at ADP, in a press release. “After two years of extraordinary gains associated with the recovery, we are moving towards more sustainable wage and employment growth as the economic impacts of the pandemic subside.”

The weaker-than-expected report comes as investors and economists are divided over whether US inflation can continue its downward trend to 2% without a significant slowdown in the economy. The strength of the labor market has been a major reason why the economy is growing faster than many expected in 2023.

The Fed raised interest rates to a 22-year high in July, and Fed Chair Jerome Powell indicated last week that the central bank is ready to hike more this year.

The ADP report is traditionally seen as an indication of what the Labor Department’s monthly jobs report will show. However, the company changed its methodology in the past year, making its predictive tendencies less clear.

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The Labor Department’s jobs report is due on Friday.