U.S. private employers added just 38,000 jobs in August. This is the slowest pace of hiring since January, according to the ADP National Employment Report. This number is well below the Dow Jones estimate of 53,000 jobs. It also follows a loss of 23,000 jobs in July. The unemployment rate is expected to stay steady at 4.1%.
Key Details
The report showed job losses in sectors like manufacturing, professional services, and information. Only a few sectors added jobs in any meaningful way. Economists have noted a trend of slowing momentum in the labor market. This trend comes amid ongoing inflation pressures. Citi's Veronica Clark said that wage growth may also slow down. She projects an increase of only 0.3% month-over-month and 3% year-over-year.
Background
The inflation rate was recorded at 3.4% in July. However, rising energy prices could widen the gap between wage growth and inflation. Brent crude oil prices went over $97 per barrel this week. This rise adds to concerns about consumer purchasing power. Analysts at Goldman Sachs pointed out that the August jobs report has often fallen short of expectations. This has happened in 11 of the last 16 years.
Related coverage: US Jobless Claims Fall to 203,000 Amid Low Layoffs.
The slowdown in job growth could lead to lower consumer spending. This would impact sectors like retail and services. Investors will closely watch the upcoming inflation data set for release on September 11. This data will provide insight into the link between wage growth and rising prices.
Watch for the official U.S. jobs report set to be released on Friday. It will give more clarity on employment trends and the health of the economy.
Based on reporting by: nbcnews.com, seekingalpha.com