ADP employment hit a new low during the year, and the Federal Reserve's policy path faced more tests

The Zhitong Finance App learned that according to data released by ADP Research on Wednesday, the number of new jobs added in the US private sector in July was 44,000, lower than market expectations. This is the smallest increase since the beginning of the year, indicating that the recent strong recruitment momentum has cooled down. The previous value was revised to 95,000. The new jobs added in July fell short of all economists' expectations in the survey. Despite the slowdown in recruitment, the report shows that the salary growth rate of job jumpers has accelerated to the highest level in nearly a year.

The data shows that the job market remains stable, supported by strong demand from enterprises and consumers. If the official monthly employment report released this Friday confirms this trend, recent employment trends mean that Fed officials can continue to focus on inflation, which is still high.

Federal Reserve Chairman Kevin Walsh called the job market “stable” and “stable” after a policy meeting last week. At the time, policymakers kept interest rates unchanged, but three officials voted to raise interest rates.

The ADP report was jointly prepared by ADP and the Stanford Digital Economy Lab and released before the Bureau of Labor Statistics (BLS) released a more comprehensive and much-publicized July employment report on Friday. Historical data shows that the indicative effect of ADP data on BLS private employment estimates is unstable.

Salary growth

The ADP report also showed that the salary increase of job-hopping workers was 7% year-on-year, while the salary increase for those who remained in office remained stable at 4.4%. By industry, the increase in wages in financial activity and manufacturing is even more significant.

ADP chief economist Nella Richardson said, “Job-changers are highly sensitive to real-time economic conditions, and rapid wage growth indicates supply constraints in some areas of the labor market.”

The government employment report (including public sector recruitment) to be released on Friday is expected to show an increase of 80,000 in non-farm payrolls in the US in July, an improvement from the official data for June (recruitment slowed in June).

According to ADP data, 36,000 new jobs were added in the education and health services sector, and 11,000 jobs were reduced in the leisure and hospitality industry. More than half of all new jobs come from small businesses.

ADP data is based on payroll records covering more than 26 million private sector employees across the US.

Furthermore, according to data from the JOLTS report released by the Bureau of Labor Statistics on Tuesday, each unemployed person in the US corresponded to 1.04 job vacancies in June, which is basically the same as in May. According to market research, economists expect private sector employment to increase by 78,000 in July (49,000 in June), overall non-farm payrolls are expected to increase by 80,000 (up 57,000 in June), and the unemployment rate is expected to remain at 4.2%.

However, there is a risk that the unemployment rate will rise slightly. According to a survey released by the World Conference Board (Conference Board) last week, the share of consumers who thought their jobs were “adequate” fell to its lowest level since February 2021 in July, suggesting that the job market may face marginal pressure.