By Jarrell Dillard, Bloomberg News (TNS)
Labor data Wednesday added further evidence that the labor market is slowing down.
U.S. companies hired workers at a more moderate pace in June and wage growth cooled in private payrolls, according to data from the ADP Research Institute. Recurring claims for unemployment benefits rose for a ninth straight week, the longest stretch since 2018 that indicates a growing number of people are having difficulty finding a new job.
The two reports, coming ahead of the government’s June employment report Friday, suggest weaker demand for workers. A separate measure published Wednesday showed that the U.S. services sector contracted last month at the fastest pace in four years, another sign that the economy is losing steam.
Treasury yields sank and stocks rose after the latest figures from the Institute for Supply Management’s composite gauge of services reinforced the case for interest-rate cuts. Markets are due to close earlier ahead of Thursday’s U.S. holiday.
In the ADP report, a 150,000 gain in private payrolls last month largely reflected an increase in job gains within leisure and hospitality.
“Job growth has been solid, but not broad-based,” Nela Richardson, chief economist at ADP, said in a statement. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”
Federal Reserve Chair Jerome Powell said Tuesday during a panel at a European Central Bank conference that there’s been a “substantial” move toward balance in the labor market between the supply and demand for workers.
Wage growth slowed for a third month in June for workers who changed jobs to 7.7% from a year ago in the ADP data, published Wednesday in collaboration with Stanford Digital Economy Lab. Workers who stayed in their job saw a 4.9% annual increase, the smallest since mid-2021.
Two industries had job losses last month, natural resources and mining as well as manufacturing, which shed payrolls for a second month.
Meanwhile, continuing claims for unemployment applications, a proxy for the number of people receiving benefits, increased to 1.86 million in the week ended June 22, the highest since November 2021, according to Labor Department data released Wednesday. First-time claims rose by 4,000 to 238,000 last week.
The level of recurring jobless claims points to more limited demand for labor as the economy slows under the weight of higher borrowing costs. At the same time, the number of initial applications indicates a gradual pickup in dismissals.
There are also scattered signs that companies are paring headcounts due to cost-cutting and softer economic conditions. U.S.-based employers announced 48,786 job cuts in June, according to Challenger, Gray & Christmas Inc. Excluding 2020, the height of the pandemic, that’s the highest number of announcements for any June since 2009.
Fed policymakers will get further insight into the state of the labor market Friday with the release of the monthly employment report. Economists anticipate a 190,000 gain in nonfarm payrolls, which include private- and public-sector jobs, a step-down from the previous month.
ADP bases its findings on payroll data covering more than 25 million U.S. private-sector employees.
— With assistance from Mark Niquette and Charles Ayitey.
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©2024 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency LLC.
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Tags: Human Resources, Payroll, Small Business
