Businesses added 38,000 jobs in August, fewer than forecast and at the lowest pace since January, private payroll firm ADP said on Wednesday.
Economists had forecast a gain of about 47,000, following the 44,000 increase in July.
Strong gains came in education and health services, up 45,000 jobs, and leisure and hospitality, with an increase of 16,000, and construction, up 12,000. However, manufacturing lost 17,000 jobs and professional and business services employment decreased by 16,000.
“Manufacturing, professional services, and information shed jobs,” Nela Richardson, chief economist at ADP, said in a statement. “Education and health care, construction, and leisure and hospitality all showed solid hiring.”
The Best Cartoons on Donald Trump
Average pay grew by 3% annually for those who stayed in their jobs, while those who switched employment saw their pay rise 4.7%.
“Once-predictable wage growth has been overtaken by the complexities of demographic change, persistent inflation, and AI’s effects on jobs,” Richardson said.
The ADP report comes a day after the government said there were 7.3 million open jobs in July, a slight gain from the downwardly revised 7.2 million a month earlier.
The labor market is holding steady but lacks the large gains that occurred in recent years. Companies are hiring, but the pace has slowed and firms are being more selective in who they add to their payrolls.
“We’re a ways off from the days of 8 million or more job openings in a given month, but the truth is the market doesn’t need to have that level of open jobs anymore to continue chugging along as it has,” Sneha Puri, economist at Indeed’s Hiring Lab, wrote on Tuesday. “The labor market remains low-hire and low-fire, and at this point, it’s starting to look less like a phase and more like the new normal.”
Federal Reserve Chairman Kevin Warsh last week described the labor market as balanced, but recent reports suggest a slowdown. At the moment, the Fed is prioritizing persistent inflation.
Separately, mutual fund giant Vanguard said on Tuesday that its own data drawn from sign-ups for 401(k) plans projects a gain of 22,000 jobs in August, of which 8,000 will be from private employers. The Bureau of Labor Statistics issues its monthly jobs report on Friday, with economists forecasting an increase of about 50,000 jobs in August. That report includes government employment.
“The labor market’s summer soft patch extended into August, with Friday’s employment report likely to show private-sector payroll growth having slowed to just 8,000 jobs,” Adam Schickling, senior economist at Vanguard wrote on Tuesday. “The slowdown appears concentrated in recruiting rather than workforce reductions, leaving new labor force entrants and those seeking employment facing the most difficult conditions. While near-term job growth is likely to remain soft, we anticipate some improvement and stabilization in hiring activity as we move into the fall.”