Slow month
U.S. private employers added just 44,000 jobs in July, ADP said today. The number came in well below forecasts. Economists had expected about 100,000 new private jobs for the month.
The reading is one of the weakest of the year. It points to a labor market that is cooling faster than many analysts expected. Hiring has slowed across services and goods-producing industries alike.
Small and mid-sized firms carried most of the hiring. Large companies cut jobs, ADP said. The construction and manufacturing sectors both lost workers, while leisure and hospitality added the most.
What the data covers
ADP's report tracks private-sector payrolls only. It does not include government jobs. The official picture will come later this week when the Labor Department releases its monthly jobs report.
Economists watch ADP closely as an early signal for that report. The two surveys do not always agree. Even so, a weak ADP number often raises questions about the strength of the broader labor market.
Rate cut expectations
The soft jobs data adds weight to calls for the Federal Reserve to cut interest rates. Fed officials have said they want more evidence that inflation is under control before easing policy.
A slowing job market gives them room to move. Markets now price in a higher chance of a rate cut at the next policy meeting. "The labor market is telling the Fed it can afford to be patient with inflation," one economist said.
Wage growth also cooled in July, ADP said. Workers who stayed in their jobs saw pay rise 4.6 percent from a year earlier. That is down from recent months and close to levels the Fed considers consistent with its inflation target.