Private Payrolls Rose Less Than Expected In August, Marking The Lowest Pace Since January

Private companies added 38,000 jobs last month, down from 46,000 in July and below analysts' expectations of 47,000, according to data from ADP.

ADP noted that the figure represents the slowest pace of job creation since January. "Manufacturing, professional services, and information shed jobs. Education and health care, construction, and leisure and hospitality all showed solid hiring," it detailed.

ADP Chief Economist Nela Richardson said pay growth shows where hiring is taking place. "To understand hiring patterns, you have to look deeply into where pay growth is accelerating, where it's slowing, and for whom," she said.

"Once-predictable wage growth has been overtaken by the complexities of demographic change, persistent inflation, and AI's effects on jobs," Richardson added.

Large companies employing more than 500 people accounted for most of the growth, adding 34,000 jobs. Small and mid-sized ones remained largely flat.

ADP figures also showed that pay gains remained steady, and those staying in their jobs saw their base pay rise by 3% compared to the same month last year.

The Bureau of Labor Statistics' nonfarm payrolls report will be released on Friday. It is expected to show an increase of 53,000 jobs, compared to a 23,000 decline in July.

July's figures stood in sharp contrast with the 83,000 jobs analysts at the Dow Jones expected the market to add. Figures for May and June were also revised downward. The 12-month average now stands at 34,000.

Data showed that the unemployment rate fell to 4.1%, compared to the 4.2% expected by analysts, but the labor force participation did so as well (61.4%) and touched the lowest level in more than five years.

Another report showed a mixed picture for the labor market. Outplacement firm Challenger, Gray & Christmas reported that announced layoff plans declined during July while corporate hiring plans increased compared with the previous month.

Elsewhere, an analysis released Wednesday by the Bank of America Institute suggested payroll growth may have accelerated during July based on customer deposit account data.

The research indicated employment gains were strongest among lower-income households, a shift that also translated into faster wage growth for those workers. According to the analysis, annual after-tax wage growth for lower-income households exceeded that of higher-income households for the first time since December 2024.

Bank of America researchers attributed the improvement largely to increased job mobility among lower-income workers. "What's driving the pick-up in after-tax wage growth among lower-income households? Alongside strong job growth, we have also observed a rise in job-to-job movements disproportionately boosting lower-income pay growth," the report said.