The private sector added 132,000 jobs in August, payroll giant ADP reported on Wednesday, while annual wages rose 7.6%, although smaller businesses suffered job losses.
Overall, employment figures represented a decline from July, when the economy added nearly 270,000 jobs, and payroll growth also slowed in July compared to June. Job losses occurred in professional and business services as well as in financial activities in August.
The August edition of ADP National Employment Report includes more granular data on job increases, as well as wages and region, and the ADP Research Institute is now partnering with the Stanford Digital Economy Lab instead of Moody’s Analytics to produce the monthly reports after a hiatus temporary. According to the report, small businesses with between one and 19 employees lost 47,000 jobs in August, while those with between 20 and 49 employees gained 72,000 jobs. Medium-sized establishments with between 50 and 249 employees gained 74,000 jobs, while those with 250 to 499 employees lost 21,000 jobs in August. Large businesses with 500 or more employees gained 54,000 jobs.
“This is the second month in a row of a slowing trend we’ve seen in the new data set,” ADP Chief Economist Nela Richardson said in a conference call with reporters. “We believe these numbers suggest a shift to a more subdued pace of hiring that we expect to see materialize over the course of 2022, as companies of all sizes try to read what has become a complex economic picture in terms of high inflation and also some very strong dynamics in terms of labor demand.
The services sector accounted for the bulk of job increases, gaining 110,000 jobs, including 96,000 in leisure and hospitality. However, the professional and business services sectors lost 14,000 jobs, according to ADP, while the financial activities sector lost 20,000. Richardson said both sectors were showing signs of slowing. The goods-producing sector added 23,000 jobs, mostly 21,000 in construction.
On a regional basis, the Northeast gained 23,000 jobs, including 4,000 in New England and 19,000 in the Mid-Atlantic. The South added 76,000 jobs and the West gained 40,000, but the Midwest lost 7,000 jobs.
In terms of earnings, the year-over-year change in annual earnings was 7.6% in August, matching monthly readings since the spring. In contrast, at the start of 2021, annual salary increases were around 2%. Yet while the pace of wage increases has been strong, its growth has flattened in recent months. Those who changed jobs saw the biggest increases, at 16.1%, while those who stayed saw only a 7.6% increase, below the rate of inflation. In professional and business services like accounting and tax preparation, the annual salary increased by 6.8%, while in financial activities jobs like banking, the annual salary increased by 7.4% . Both were below the overall average of 7.6% across all sectors. The sector that saw the highest wage increase was leisure and hospitality with 12.1%.