Private hiring sharply went down in November, which may indicate that the labor market could be losing some steam, as per a report published by ADP on Wednesday.
Companies added only 127,000 jobs in November, a significant decrease from the 239,000 reported in October and well below the Dow Jones estimate of 190,000. It was also the lowest figure since January.
The relatively low total comes amid Federal Reserve efforts to loosen up a labor market in which nearly two open positions exist for every available worker. Despite the fact that the central bank has raised its benchmark borrowing rate six times this year, unemployment remains at 3.7%, near the lowest since 1969.
“Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains,” Nela Richardson, the ADP’s chief economist, said. “In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting and the post-pandemic recovery is stabilizing.”
The ADP report is released two days before the Labor Department’s more closely watched nonfarm payrolls count. Dow Jones polled economists are projecting the report to reveal a 200,000 increase after a 261,000 increase in October.
According to the ADP report, the biggest gainer by far was the leisure and hospitality industry, which increased by 224,000.
However, losses in manufacturing (-100,000), professional and business services (-77,000), financial activities (-34,000), and information services more than offset this. Goods-producing industries lost 86,000 jobs overall, while service firms gained 213,000.
Despite the shaky job market, wages continued to rise.
ADP reported that pay increased 7.6% year on year, which was slightly slower than the 7.7% reported for October.
In terms of size, all job creation came from companies with 50-499 employees, a sector that added 246,000 jobs. Small businesses lost 51,000 jobs, while large businesses lost 68,000.