Private hiring slowed sharply during November, which could see the historically tight labor market lose some steam, according to a report Wednesday from payroll processing firm ADP.
Companies added just 127,000 positions for the month, 239,000 firms reported for October And well below the Dow Jones estimate of 190,000. It was also the lowest total since January.
The relatively weak total comes amid the Federal Reserve’s efforts to loosen the jobs picture that still has about two open positions for every available worker. the central bank has Raised its benchmark lending rate six times this year, but the unemployment rate is still 3.7%, the lowest since 1969.
“The current turn in the labor market may be difficult to capture, but our data suggests that Federal Reserve tightening is having an impact on job creation and wage gains,” said ADP chief economist Nella Richardson. “Also, companies are no longer in hyper-replacement mode. Fewer people are leaving and the post-pandemic recovery is stabilising.”
The ADP report comes two days before the Labor Department releases its more closely watched non-farm payrolls count. Economists polled by Dow Jones expect to see gains of 200,000 after the report an increase of 261,000 in October,
In the ADP report, the sector with the biggest gain by far was leisure and hospitality, which saw an increase of 224,000.
However, this was offset by losses in manufacturing (-100,000), professional and business services (-77,000), financial activities (-34,000) and information services (-25,000). Goods-producing industries saw an overall job decline of 86,000, while service firms added 213,000 on net.
Wages continued to rise even with a fluctuating number of jobs.
ADP said wages rose 7.6% from a year ago, although that was a slightly slower pace than the 7.7% it reported for October.
From a size perspective, all job creation came from companies that employed 50-499 workers, a sector that added 246,000 jobs. Small companies lost 51,000 while large companies lost 68,000.