A “Now Hiring” sign hangs at a FedEx store on Broadway in New York City on June 7, 2024.
Michael M. Santiago | Getty Images
Payroll company ADP reported Wednesday that private job growth slowed further in July, pushing wage growth to its lowest level in three years.
Business payrolls added just 122,000 jobs this month, the lowest since January and below a revised 155,000 in June. Economists surveyed by Dow Jones had expected a gain of 150,000.
ADP also reported that wages for those who stayed in their jobs increased 4.8% from a year ago, the smallest increase since July 2021 and down 0.1 percentage point from June.
“With wage growth slowing, the labor market is aligning with the Fed’s efforts to keep inflation in check,” said Nella Richardson, chief economist at ADP. “If inflation does rise again, it won’t be because of labor.”
Futures tracking major stock indexes rose on the news, while government bond yields fell.
There was more positive inflation news on Wednesday: The Labor Department’s Bureau of Workforce Services reported that its Employment Cost Index, a measure closely watched by Federal Reserve officials, rose just 0.9% in the second quarter, seasonally adjusted.
That was below a 1.2% acceleration in the first quarter and below Dow Jones’s forecast of a 1% increase.
Both reports could increase the chances that the Fed will signal a rate cut in September when it wraps up its two-day meeting later in the day.
Employment gains were largely concentrated in two sectors: trade, transport and public works, which added 61,000 workers, and construction, which contributed 39,000. Other sectors that saw gains included leisure and hospitality (24,000), education and health services (22,000) and other services (19,000).
Several sectors reported net losses this month, including professional and business services (-37,000), information (-18,000) and manufacturing (-4,000). Businesses with fewer than 50 employees also reported losses, falling by 7,000 in June.
Regionally, job gains were concentrated in the South, which added 55,000 jobs, while the Midwest added just 17,000.
The ADP report comes two days before the Department of Labor’s Bureau of Labor Services releases nonfarm payrolls, which, unlike the ADP tally, includes government payrolls. The two reports can differ significantly, with the ADP beating the BLS’s estimate of 136,000 private payrolls in June.
Economists expect payrolls to fall to 185,000 in July from 206,000 in June, and the unemployment rate to remain steady at 4.1%.
