US Markets
Wednesday, December 6th, 2023 3:37 pm EDT
Key Points
- Sluggish Job Growth and Wage Increase: In November, the private sector experienced a further slowdown in job creation, with companies adding only 103,000 workers, slightly below the revised October figure of 106,000 and falling short of the Dow Jones estimate of 128,000. Alongside this modest job growth, annual pay showed a 5.6% increase, marking the smallest gain since September 2021. Notably, job-changers witnessed an 8.3% increase in wages, representing the lowest premium for switching positions in the three years of ADP’s data tracking.
- Shifts in Job Creation Dynamics: Leisure and hospitality, which had been a leading sector in job creation since the onset of the COVID-19 pandemic, recorded a loss of 7,000 jobs in November. In contrast, trade, transportation, and utilities saw an increase of 55,000 positions, education and health services added 44,000, and other services contributed 15,000 jobs. Notably, services-related industries accounted for all the job gains in the month, while goods-producing sectors experienced a net loss of 14,000 jobs, including declines in manufacturing and construction. Surprisingly, recent layoffs in Silicon Valley and on Wall Street did not reflect in the data, as both sectors posted gains.
- Impact on Hiring Patterns and Business Sizes: Companies with 50 to 499 employees led in job creation, adding 68,000 jobs, while small businesses contributed just 6,000 jobs. The report comes ahead of the more widely observed nonfarm payrolls count from the Labor Department, and while the two reports can differ, private payroll numbers were close in October. Including government jobs, nonfarm payrolls increased by 150,000 in October, with an expected growth of 190,000 in November according to Dow Jones. Additionally, a signal of a loosening labor market emerged as job openings declined to 8.73 million in October, the lowest level since March 2021, according to the Labor Department. These indicators collectively underscore the evolving dynamics of the job market, with shifts in hiring patterns and wage growth, particularly in the post-pandemic recovery period.
In November, the private sector’s job creation witnessed a further slowdown, as reported by payroll processing firm ADP. The data revealed that companies added only 103,000 workers during the month, slightly below the revised October figure of 106,000 and falling short of the Dow Jones estimate of 128,000. The subdued job growth was accompanied by the smallest growth in annual pay in over two years, with a 5.6% increase. ADP noted that this gain in wages was the most modest since September 2021, and for job-changers, wage increases stood at 8.3%, marking the lowest premium for switching positions in the three years of ADP’s data tracking.
Leisure and hospitality, which had been a leader in job creation since the onset of the COVID-19 pandemic in early 2020, recorded a loss of 7,000 jobs in November. In contrast, trade, transportation, and utilities saw an increase of 55,000 positions, while education and health services added 44,000, and other services contributed 15,000 jobs. Notably, services-related industries accounted for all the job gains for the month, as goods-producing sectors experienced a net loss of 14,000 jobs. This decline included 15,000 jobs in manufacturing, despite the resolution of the United Auto Workers strikes, and 4,000 jobs in construction. Surprisingly, recent layoffs in Silicon Valley and on Wall Street did not reflect in the data, as both sectors posted gains in the month.
Chief economist at ADP, Nela Richardson, highlighted that the major job creators during the post-pandemic recovery, such as restaurants and hotels, have already played their role, and the return to trend in leisure and hospitality suggests a shift towards more moderate hiring and wage growth in 2024.
In terms of business sizes, companies with 50 to 499 employees led in job creation, adding 68,000 jobs, while small businesses contributed just 6,000 jobs.
The ADP report precedes the more widely monitored nonfarm payrolls count from the Labor Department by two days. Despite potential differences between the two reports, private payroll numbers were close in October, with the Labor Department reporting growth of 99,000, just 7,000 below the revised ADP tally. Including government jobs, nonfarm payrolls increased by 150,000 in October, and it is anticipated to show a growth of 190,000 in November, according to Dow Jones.
As an additional sign of a loosening labor market, the Labor Department reported on Tuesday that job openings declined to 8.73 million in October, marking the lowest level since March 2021. These combined indicators underscore the evolving dynamics of the job market and the challenges and shifts in hiring and wage growth patterns.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/06/private-payrolls-increased-by-103000-in-november-below-expectations-adp-says.html
