ADP Reports Sharp Slowdown in U.S. Job Growth to 177,000 in August, Falling Below Expectations

## US Job Creation Lower Than Expected, Signals Slowing Economy

In a surprising development, job creation in the United States in August was lower than expected, indicating a potential slowdown of the resilient US economy. This is reportedly due to the pressure from higher interest rates.

## August Employment Data Reveals Slowing Job Growth

ADP, a well-respected firm in the field, reported on Wednesday that private employers added 177,000 jobs in August. This figure is significantly lower than the revised total of 371,000 jobs added in July. Economists surveyed by Dow Jones anticipated an addition of 200,000 jobs in August.

In addition to the slower job creation, ADP also reported a deceleration in pay growth for workers who shifted jobs and those who retained their current positions.

## “Moving Toward More Sustainable Growth”

According to Nela Richardson, ADP’s chief economist, the numbers for August align with the pace of job creation before the pandemic. “After two years of exceptional gains tied to the recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede,” Richardson said in a press release.

The report, weaker than expected, comes at a time when economists and investors are debating if the US inflation can continue to decline to 2% without a significant economic slowdown. The strength of the labor market has been a key driving force behind the faster-than-expected economic growth in 2023.

## Federal Reserve’s Interest Rate Hike

The Federal Reserve hiked interest rates to a 22-year high in July. The Fed Chair, Jerome Powell, indicated last week that the central bank is prepared for further rate hikes this year.

## ADP Report as a Precursor to the Department of Labor’s Report

Historically, the ADP report has been seen as an indicator of what the Department of Labor’s monthly jobs report will reveal. However, ADP altered its methodology last year, which has made its predictive tendencies less certain. The Department of Labor’s jobs report is scheduled for release on Friday.

The slowing job creation in August, along with the Federal Reserve’s stance on interest rates, will likely have significant implications for the future of the US economy.

Original Story at www.cnbc.com – 2023-08-30 12:15:15