On June 7, 2024, a FedEx branch on Broadway in New York City displayed a “Now Hiring” sign.
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Employment processing firm ADP reported on Wednesday that private job growth slowed further in July, while wage growth hit a three-year low.
Businesses added just 122,000 jobs this month, the lowest gain since January and down from an upwardly revised 155,000 jobs in June. Economists surveyed by Dow Jones had expected a gain of 150,000 points.
ADP also reported that wages for those who remained in the workforce were up 4.8% from a year ago, the smallest increase since July 2021 and down 0.1 percentage point from June.
“As wage growth slows, the labor market is cooperating with the Fed’s efforts to slow inflation,” said Nela Richardson, chief economist at ADP. “If inflation picks up, it won’t be because of labor.”
Futures linked to major stock indexes rose after the report, while Treasury yields fell.
There was more positive inflation news on Wednesday, as the U.S. Department of Labor’s Bureau of Labor Services reported that the employment cost index closely watched by Fed officials rose only 0.9% in the second quarter, based on seasonally adjusted data.
That was below first-quarter growth of 1.2% and the Dow Jones Industrial Average’s 1% growth forecast.
The two reports could increase the likelihood that the Fed will signal a rate cut in September when it concludes its two-day meeting later in the day.
Employment growth was concentrated in two industries: trade, transportation and utilities, which added 61,000 workers, and construction, which added 39,000 workers. Other growing industries include leisure and hospitality (24,000), education and health services (22,000) and other services (19,000).
Several industries reported net losses for the month. These include professional and business services (-37,000), information (-18,000) and manufacturing (-4,000). Companies employing fewer than 50 people also posted losses, with headcount falling by 7,000 in June.
Geographically, job growth was concentrated in the South, which added 55,000 jobs, while the Midwest added just 17,000 jobs.
Two days before the ADP report is released, the U.S. Department of Labor’s Bureau of Labor Services will release nonfarm employment data, which, unlike the ADP data, includes government jobs. The two reports may differ widely, with ADP beating the Bureau of Labor Statistics’ June private payroll estimate of 136,000.
Economists expect employment to grow by 185,000 in July, down from 206,000 in June, with the unemployment rate holding steady at 4.1%.
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