(Bloomberg) -- US companies added the fewest number of jobs since the start of 2021 in September and pay growth slowed, pointing to a weakening in labor demand in several industries.
Private payrolls rose 89,000 last month after climbing 180,000 in August, according to figures published Wednesday by the ADP Research Institute in collaboration with Stanford Digital Economy Lab.
The figure trailed all estimates in a Bloomberg survey of economists. Leisure and hospitality drove the September gain, offsetting job losses at professional and business services, manufacturing and trade and transportation. Large businesses reduced payrolls.
The report adds to evidence of a further moderation in the labor market, which has been instrumental in fueling consumer spending and therefore economy. Some employers are scaling back hiring amid lingering inflation and higher borrowing costs.
Stock futures rose and Treasury yields sank after the report as the odds of another Federal Reserve interest-rate hike by year-end declined.
“We are seeing a steepening decline in jobs this month,” Nela Richardson, ADP’s chief economist, said in a statement. “Additionally, we are seeing a steady decline in wages in the past 12 months.”
Workers who stayed in their job saw a 5.9% median pay increase in September from a year ago, according to ADP. That marked the smallest gain in two years. For those who changed jobs, the 9% median rise in annual pay was the weakest since June 2021.
While employees have enjoyed strong wage gains over the past few years, the pace of pay growth has started to cool as labor force participation increases.
Firms with at least 500 employees cut 83,000 jobs last month, the second-largest decline since early in the pandemic. All regions except the South added workers in September.
The government’s jobs report on Friday is expected to show a 155,000 increase in September private-industry payrolls. However, the ADP figures are not intended to serve as a predictor of the Bureau of Labor Statistics’ data.
“Leaving aside the loose relationship between the ADP and BLS data, the ADP figures do show a moderating trend for job growth in recent months, which we think is very roughly consistent with what should be going on in the labor market,” Daniel Silver, an economist at JPMorgan Chase & Co., said in a note.
Another government report out Tuesday showed US vacancies jumped to 9.61 million in August amid a surge in white-collar postings. Though the supply and demand for labor is coming more into balance, there are still 1.5 open positions for each unemployed American.
--With assistance from Jordan Yadoo and Reade Pickert.
(Adds economist’s comment)
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