Private-sector hiring slowed sharply during November, a sign that the historically tight labor market may be losing ground, according to a report Wednesday from payroll processing firm ADP.
Companies added just 127,000 jobs for the month, a sharp reduction from the 239,000 firms reported for October and well below the Dow Jones estimate of 190,000. It was also the lowest total since January.
The relatively weak sum comes amid the Federal Reserve’s efforts to loosen up a job picture where there are still almost two vacancies for every unemployed worker. The central bank has raised its benchmark interest rate six times this year, but unemployment remains at 3.7%, close to the lowest since 1[ads1]969.
“Turning points can be difficult to capture in the labor market, but our data suggests that Federal Reserve tightening is having an impact on job creation and wage gains,” said ADP Chief Economist Nela Richardson. “In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting, and the post-pandemic recovery is stabilizing.”
The ADP report comes two days before the Labor Department releases its more closely watched nonfarm payrolls. Economists polled by Dow Jones expected the report to show an increase of 200,000 after a rise of 261,000 in October.
In the ADP report, the biggest gain by far was in the leisure and hospitality sector, which saw an increase of 224,000.
However, this was offset by losses in manufacturing (-100,000), professional and business services (-77,000), financial activities (-34,000) and information services (-25,000). Goods-producing industries overall experienced a decline of 86,000 jobs, while service companies increased by 213,000 on net.
Even with the volatile job numbers, wages continued to rise.
Wages rose 7.6% from a year ago, ADP said, although that was a slightly slower pace than the 7.7% reported for October.
From a size standpoint, all job creation came from companies employing 50-499 workers, a sector that added 246,000 jobs. Small businesses lost 51,000 while large businesses decreased by 68,000.