ADP: 127,000 private jobs added in November; lowest since January 2021

Nov. 30 (UPI) -- Job creation in the U.S. economy slowed by the highest rate since January 2021, signaling policies from the Federal Reserve are starting to impact employment, payroll processor ADP said Wednesday.

ADP reported that private employers added 127,000 hires to their payrolls in November, down from the 239,000 new hires in October and below market expectations of 190,000 additions for the month.

"Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains," said Nela Richardson, the chief economist at ADP.

U.S. Federal Reserve Chairman Jerome Powell said during the central bank's annual symposium at the Jackson Hole resort in Wyoming this year that aggressive rate hikes meant to dampen high levels of consumer inflation would come at a cost.

"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," he said at the time. "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

Market analysts had anticipated that rate hikes from the Fed, to the tune of three-quarters of a percent, would drive the U.S. economy into recession. The Fed has raised its benchmark rates six times so far this year, but unemployment levels remain at their lowest since the late 1960s.

Most metrics signal that a recession would formally begin when demand slumps to the point that companies start shedding workers, resulting in even less demand from laid-off workers and pushing the economy toward a contraction.

The U.S. economy, so far at least, is still expanding. Real gross domestic product increased at an annual rate of 2.9% during the third quarter, compared with a 0.6%contraction during the previous period.

"The increase in the third quarter primarily reflected increases in exports and consumers pending that were partly offset by a decrease in housing investment," the Commerce Department stated.

Spending would not be robust during a recession. Data from Adobe Analytics found that spending on both Thanksgiving and Black Friday set records this year.

That spending might not last, however, given that inflation in the U.S. economy remains high at 7.7% for the 12-month period ending in October. ADP founds wages might not be keeping up as pay gains moderated in November.

"Pay growth remained elevated even as it continued a modest but broad-based deceleration," ADP's report read. "Job changers notched their fifth straight slowdown and the smallest increase in pay since January."