US July Private Employment Growth Hits Lowest This Year... Wage Increase Rate Lowest in 3 Years

Private Employment Growth Below Expectations
Wage Increase Rate 4.8%
Labor Department Employment Report on 2nd Next Month in Focus

Last month, the increase in private employment in the United States was the smallest since the beginning of this year. The wage growth rate recorded its lowest level since 2021. This is analyzed as another sign that the U.S. labor market is cooling down.

[Image source=AP Yonhap News]

According to the U.S. employment report released by ADP, a private labor market research firm, on the 31st (local time), private sector new job employment in July increased by 122,000, marking the lowest level this year.

This figure fell short of the market expectation of 147,000 and showed a significant decrease compared to June, when private new employment increased by 155,000.

By sector, trade, transportation, and utilities increased by 61,000. Construction rose by 39,000, leisure and hospitality by 24,000, and education and health services by 22,000. On the other hand, professional and business services decreased by 37,000, and the information and manufacturing sectors declined by 18,000 and 4,000 respectively.

The pace of wage growth has slowed. Wages for workers who have been employed at the same job for the past 12 months increased by 4.8% compared to a year ago. The wage growth rate for job changers was 7.2% year-over-year. Both are the lowest levels since 2021 and fell by 0.1 percentage points and 0.5 percentage points respectively compared to the previous month.

Nela Richardson, ADP’s chief economist, stated, "As wage growth slows, the labor market is participating in the Federal Reserve’s efforts to slow inflation," adding, "If inflation rebounds, it will not be because of the labor market."

This ADP employment report was released ahead of the U.S. Department of Labor’s July employment report scheduled for the 2nd of next month. The more accurate status of the U.S. labor market will be revealed in the Department of Labor’s employment report. Experts expect that nonfarm payrolls increased by 177,000 last month, significantly slowing down compared to 206,000 in the previous month. The unemployment rate is expected to have remained steady at 4.1% as in the previous month.