U.S. private-sector job growth in August fell short of market expectations, data showed.
On the 2nd (local time), according to Automatic Data Processing (ADP), U.S. private-sector employment in August rose by only 38,000 from the previous month, missing both the market expectation of 48,000 and the revised July figure of 46,000. Jobs increased, but the gain was the smallest since January.
By industry, education and health services added 45,000, the biggest increase. In particular, the healthcare institutional sector led the gains. Leisure and hospitality and construction rose by 16,000 and 12,000, respectively.
Manufacturing, by contrast, fell by 17,000. Professional and business services also decreased by 16,000. Employment declined as well in the natural resources and mining and in the trade, transportation and utilities institutional sector.
Attention is on whether the official nonfarm payrolls to be released by the U.S. Labor Department on the 4th will show a similar trend. The market projects that August nonfarm payrolls will increase by 53,000, returning to growth after one month.
A hiring slowdown could also influence interest-rate decisions by the Federal Reserve (Fed). When employment weakens, the need to cut rates grows to prevent a recession, but lowering rates before inflation has eased sufficiently could rekindle price pressures.
Fed Chair Kevin Warsh also struck a hawkish tone at the recent Jackson Hole meeting, voicing concern about inflation. However, if a slowdown in the job market becomes clear, keeping rates elevated could add to economic strains.
CME FedWatch estimated after the ADP report that there is a 66.2% chance the benchmark rate will be raised by 0.25 percentage point at the September Federal Open Market Committee (FOMC) meeting. That is slightly down from 67.2% the previous day, but sharply higher than 36.6% a week earlier.