Private sector job creation in November showed signs of slowing down, according to a recent report by payroll processing firm ADP. The report, which provides insights into the state of the labor market, revealed that companies added 103,000 workers in November. While this number is slightly below the revised figure of 106,000 in October, it is also lower than the estimated 128,000.
One of the most concerning findings in the report is the smallest gain in annual pay in over two years. Wages increased by just 5.6%, marking the slowest growth since September 2021. In addition, job-changers saw a decrease in wage increases, with the data showing a premium of 8.3%, the lowest since ADP began tracking this data three years ago.
The leisure and hospitality sector, which had been leading job creation during the post-pandemic recovery, recorded a loss of 7,000 jobs in November. This setback may signal potential challenges for this sector in the coming months. On a more positive note, trade, transportation, and utilities saw an increase of 55,000 positions, and education and health services added 44,000 jobs.
However, goods-producers suffered a net loss of 14,000 jobs, fueled by declines in manufacturing and construction. This decline could have wider implications for the economy, as these industries often serve as key drivers of job creation and overall growth.
The report also highlighted that companies with between 50 and 499 employees were the primary contributors to job creation in November, adding 68,000 jobs. In contrast, small businesses only added 6,000 jobs. This discrepancy raises questions about the health and sustainability of the small business sector.
The ADP report is viewed as a precursor to the Labor Department’s nonfarm payrolls count, which is closely watched by economists and investors. The Labor Department recently reported a decline in job openings to 8.73 million in October, the lowest level since March 2021. This decline, coupled with the findings of the ADP report, suggests that the labor market may be loosening and could experience more moderate hiring and wage growth in 2024.
Overall, the ADP report paints a mixed picture of the job market, with slower job creation and stagnant wage growth. While some sectors continue to show promise, others are facing challenges. These findings may indicate a potential shift in the labor market and could have long-term implications for the overall economy.
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