ADP reports that August private payrolls increased by only 99,000, which is the smallest gain since 2021 and significantly below estimates.

• Last month, companies hired 99,000 workers, which was below the downwardly revised 111,000 in July and also below the consensus forecast for 140,000, as reported by payrolls processing firm ADP.
• Recently, data points indicate that hiring has slowed significantly since the Covid outbreak in early 2020, as corroborated by the report.
• While hiring has slowed down significantly, only a few industries reported job losses, according to the ADP data.

In August, ADP reported that private sector payrolls grew at their slowest pace in over three-and-a-half years, indicating a weakening labor market.

In July, 111,000 workers were hired by companies, which is less than the revised estimate of 140,000 and below the consensus forecast of the Dow Jones, which was 140,000.

Since January 2021, the weakest month for job growth was August, according to data from a payrolls processing firm.

Nela Richardson, ADP chief economist, stated that the job market's decline led to slower-than-normal hiring after two years of rapid growth.

Recently, data points indicate that hiring has slowed significantly since the Covid outbreak in early 2020, as corroborated by the report.

In July, job openings reached their lowest point since January 2021, according to a Labor Department report, while Challenger, Gray & Christmas reported that August 2021 was the worst for layoffs since 2009 and the slowest year for hiring since the firm began tracking the metric in 2005.

Despite a significant decrease in hiring, only a few sectors reported actual job losses. Specifically, professional and business services declined by 16,000, manufacturing lost 8,000 jobs, and information services experienced a decline of 4,000.

Despite the challenges, several sectors experienced growth, including education and health services with an addition of 29,000, construction with 27,000, and other services with 20,000. Financial activities also gained 18,000, and trade, transportation, and utilities saw a rise of 14,000.

Companies with fewer than 50 employees experienced a loss of 9,000, while those with between 50 and 499 employees saw an increase of 68,000.

Despite the slowing pace of wage growth, annual pay increased by 4.8% for those who remained in their jobs, which is similar to the July increase, according to ADP.

The ADP count is now preparing for the closely watched nonfarm payrolls report, which the Bureau of Labor Statistics will release on Friday. Although the two reports can differ significantly, they were almost perfectly aligned in July.

The BLS reported that private payrolls grew by 97,000 in July, which is lower than the consensus forecast of 114,000. Despite this, the unemployment rate ticked down to 4.2%. However, recent data may add some downside risk to the estimate, as the consensus forecast is for payrolls to have increased by 161,000.

The Federal Reserve is expected to lower interest rates due to the weakening jobs picture, with the main question being how quickly and aggressively it will move. Current market pricing suggests a quarter percentage point cut at this month's meeting and a full percentage point reduction to the federal funds rate by the end of 2024.

ADP reported a decline of 9,000 jobs in its August report after conducting a rebenchmarking of its data based on the Quarterly Census of Employment and Wages. Meanwhile, the BLS made an adjustment of 818,000 between April 2023 and March 2024, indicating that nonfarm payrolls had been overcounted. ADP will do a full-year adjustment in February 2025.