U.S. private sector job growth slows for second straight month

Aug. 31 (UPI) -- U.S. job growth in the private sector slowed for a second straight month in August, according to new ADP data ahead of Friday's Labor Department numbers.

Private sector employers added 132,000 jobs in August, down from 268,000 in July and 480,000 in June, according to ADP's National Employment Report.

"Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy's conflicting signals," said Nela Richardson, chief economist at ADP. "We could be at an inflection point, from super-charged job gains to something more normal."

The largest firms created the most jobs in August. Job sectors including leisure, hospitality, trade and transportation created the most positions. All regions across the country saw job gains except the Midwest.

Annual wages were up 7.6% in August for those who stayed at their jobs, while pay increases jumped to 16.1% for workers who changed jobs. Pay raises were in line with Spring of 2022, but are higher when compared to 2021 when annual pay increases were running at about 2%. This is the first time ADP has released wage data.

The continued slowdown in job growth comes amid inflation concerns and whether the economy is headed for a recession.

In June, consumer prices increased 9.1% over the year before, according to the Labor Department with high energy prices fueling the worst inflation in 40 years. Inflation eased a bit in July to 8.5% with the help of falling gas prices.

The government's employment data will be released Friday with economists predicting the Labor Department will report combined public and private job growth rose this month by 318,000.

ADP introduced new methodology to come up with its August numbers, making it the first time the research institute did not forecast the government's employment data.

"Prior to the methodology revision, the ADP data were far from consistent in predicting changes in the government payrolls data," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "Coming months readings will show whether the data more closely track the Labor Department employment report."