Private sector added 132K jobs in August as pay rose 7.6%

The private sector added 132,000 jobs in August, payroll giant ADP reported Wednesday, while annual pay climbed 7.6%, although the smallest businesses experienced job losses.

Overall the employment figures represented a step back from July, when the economy created nearly 270,000 jobs, and payroll growth also slowed in July when compared to June. Job losses occurred in professional and business services as well as financial activities in August.

The August edition of ADP's National Employment Report includes more granular data on job increases, along with pay and region, and the ADP Research Institute is teaming up now with the Stanford Digital Economy Lab instead of Moody's Analytics to produce the monthly reports after a temporary hiatus. Small businesses with between one and 19 employees lost 47,000 jobs in August, according to the report, while those with between 20 and 49 employees gained 72,000 jobs. Medium-size establishments with between 50 and 249 employees gained 74,000 jobs, while those with 250 to 499 employees lost 21,000 jobs in August. Large companies with 500 employees or more gained 54,000 jobs.

"This is the second consecutive month of a slowing trend we've seen in the new data series," said ADP chief economist Nela Richardson during a conference call with reporters. "We think that these numbers suggest a shift to a more moderate pace of hiring that we expect to see materialize over the course of 2022 as firms of all sizes try to read what has become a complex economic picture in terms of high inflation and also some very strong dynamics in terms of labor demand."

The service sector accounted for the bulk of the job increases, gaining 110,000 jobs, including 96,000 in leisure and hospitality. However, the professional and business services sectors lost 14,000 jobs, according to ADP, while the financial activities sector lost 20,000. Richardson said both sectors were showing signs of a slowdown. The goods-producing sector added 23,000 jobs, mainly from 21,000 in construction.

On a regional basis, the Northeast gained 23,000 jobs, including 4,000 in New England and 19,000 in the Mid-Atlantic. The South added 76,000 jobs and the West gained 40,000 jobs, but the Midwest lost 7,000 jobs.

In terms of pay, the year-over-year change in annual pay was 7.6% in August, consistent with monthly readings since the spring. By way of contrast, in early 2021, annual pay increases were running at about 2%. Still, while the pace of pay increases has been elevated, its growth has flattened in recent months. People who changed jobs saw the biggest increases, at 16.1%, while those who stayed only saw a 7.6% increase, below the rate of inflation. In professional and business services like accounting and tax preparation, annual pay increased 6.8%, while in financial activities jobs like banking, annual pay increased 7.4%. Both were below the overall average of 7.6% across sectors. The sector that saw the biggest pay increase was leisure and hospitality at 12.1%.