Private sector job growth cools sharply in January to 107,000, worse than expected: ADP
Last Updated on January 31, 2024 by Admin
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Hiring by U.S. companies slowed more than expected than expected in January, a possible sign the labor market is finally slowing in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.
Companies added 107,000 jobs last month, missing the 145,000 gain that economists surveyed by Refinitiv predicted.
The weaker-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has hiked interest rates to the highest level since 2001. Policymakers signaled last month that they are done raising rates amid signs that inflation is finally moderating and the economy is slowing.
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Workers replace power lines in Monterey Park, California, on Oct. 6. (FREDERIC J. BROWN/AFP via Getty Images / Getty Images)
In a welcoming sign for the Fed, wage growth continued to shrink in January.
Annual pay rose 5.2% last month, according to the report. For workers who switched jobs, wages climbed 7.2%, the smallest annual gain since May 2021.
“Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally,” said Nela Richardson, ADP chief economist.
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The job growth slowdown hit nearly every sector last month. The leisure and hospitality industry accounted for the most gains in January, adding just 28,000 new employees. Trade, transportation and utilities added 23,000 workers, while employment in construction rose by 22,000.
Just one sector shed jobs last month: Information, with a decline of 9,000.
Educators gather to talk to prospective hires during a hiring event for Prince George’s County school district hosted at Dr. Henry A. Wise Jr. High School in Upper Marlboro, Maryland, on Aug. 2. (Amanda Andrade-Rhoades/For The Washington Post via Getty Images / Getty Images)
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The data precedes the release of the more closely watched January jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 180,000 workers, following a gain of 216,000 in December.
The unemployment rate is expected to inch higher to 3.8%.
ADP numbers can differ drastically from the official government count and have historically been an unreliable indicator of what’s to come.
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