New data from ADP released Thursday showed the private sector added its fewest jobs in a month since January 2021, signaling a cooling labor market.
ADP’s National Employment Report for August showed 99,000 jobs were added in the month, well below economists estimates for 145,000 and fewer than the 122,000 jobs added in July. The August data marked the fifth straight month payroll additions had slowed from the month prior.
ADP chief economist Nela Richardson told Yahoo Finance on a call with reporters Thursday morning that the data shows a labor market that is “undoubtedly cooling.”
But Richardson added there are other factors to consider when assessing how weak the labor market truly is. Richardson said that when her team speaks with clients, they are still hearing that churn in the labor force — people leaving their job for another either by choice or not — remains “quite low.”
“People are also staying in their jobs,” she said. “They’re not quitting, we’re not in the Great Resignation, and so there’s less need to hire.”
To Richardson, this sets the Fed up to be “slow and steady” and lean toward a 25 basis point interest rate cut.
“I don’t think that there’s anything in the ADP numbers, and I suspect what you’ll hear from [Bureau of Labor Statistics], that changes the natural inclination of the Fed to be data dependent and moderated in its policy,” Richardson said.
Notably, Richardson’s base case relies on no alarming signs coming from the BLS’ August jobs report. We’ll know more about whether that scenario remains intact at 8:30 a.m. ET on Friday.