The numbers: Businesses added just 103,000 new jobs in November, paycheck company ADP said, in another sign of slower hiring and a softer U.S. labor market.
Economists polled by the Wall Street Journal had forecast a 128,000 increase.
The ADP payroll estimate is not an accurate predictor of the government’s official employment report that follows a few days later, but both surveys signal a deterioration in the jobs market. Companies are not seeking to hire as many people or fill every job openings that pop up.
The government on Friday is expected to report 190,000 new jobs were created in November, according to a Wall Street Journal poll of economists. The official report includes government workers unlike ADP.
Key details: ADP says the economy has only added a combined 298,000 jobs since September — less than 100,000 a month — to mark the weakest stretch since early in the pandemic in 2020.
The government’s employment report has shown a bigger increase in jobs, but it also points to a slowdown in hiring.
In November, ADP said almost all the new jobs were created in transportation, education and health care. Employment fell in construction and health care.
The slowdown in hiring has reduced the leverage of employees over employers in a tight labor market.
Workers who’ve stayed in the same job earned a still-sizable 5.9% increase in pay in the past 12 months, ADP said, but that’s the smallest gain in three years. The premium for people who switch jobs also fell to a three-year low.
Big picture: The jobs market has lost some of its sizzle this year.
Higher interest rates orchestrated by the Federal Reserve to tame inflation have slowed the economy. Businesses adding fewer workers and they are trying to hold the line on pay increases.
The labor market is still quite robust, however, as evidenced by a low 3.9% unemployment rate and persistent complaints by businesses of a shortage of labor. The economy could avoid a recession that normally follows interest-rate increases if unemployment stays low.
Looking ahead: “ADP’s payroll data shows the Fed’s anti-inflation treatment is now really taking effect,” said David Russell, global head of market strategy at TradeStation. “The numbers point toward a soft landing, but investors may start to worry about a recession if policy remains too hawkish. It’s the Fed’s battle to lose at this point.”
Before the ADP report, the Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Wednesday trades.
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