Private Employment Growth Slows in July

Private employers in the U.S. added fewer roles than expected in July, as job growth declined and pay gains continued to slow, according to a report by payroll processor ADP on Wednesday.

The ADP Employment report showed that private payrolls rose by 122,000 last month, down from an upwardly-revised 155,000 in June. Economists had anticipated a figure of 147,000.

Year-over-year pay gains for job-stayers slowed to 4.8% in July, marking the slowest pace of growth in three years. Job-changers also saw a significant drop, with pay gains slowing to 7.2% from 7.7%.

Nela Richardson, chief economist at ADP, stated, “With wage growth abating, the labor market is playing along with the Federal Reserve’s effort to slow inflation. If inflation goes back up, it won’t be because of labor.”

These statistics suggest a potential easing in labor demand within the world’s largest economy, which could increase expectations that the Federal Reserve will cut interest rates later this year. A slowdown in the job market may reduce upward pressure on wages and, consequently, inflation.

Traders await more information on the strength of the U.S. labor market with the upcoming monthly nonfarm payrolls report, scheduled for release on Friday.