In September, US companies increased hiring activity, ending a five-month slowdown in employment growth. Data from the ADP report, often called "mini non-farm payrolls," showed an increase of 143,000 jobs, surpassing economists' expectations of 125,000, while August saw the smallest gain since March 2023. Although job numbers bounced back, the three-month average fell to 119,000, the lowest since 2020.
Other indicators also suggest a cooling US labor market: the unemployment rate has steadily risen in recent months, and various metrics measuring employment growth have softened. The Federal Reserve responded by cutting interest rates by 50 basis points in September to counteract further economic weakening.
Federal Reserve Chair Jerome Powell mentioned that the labor market remains robust but has significantly cooled over the past year. He added that achieving a 2% inflation rate does not require further weakening of labor market conditions.
The US government is set to release the September non-farm payroll report on Friday, with market expectations that job numbers will show moderate growth for the second consecutive month and the unemployment rate will hold steady at 4.2%.
Another report released Tuesday indicated that despite an unexpected rise in job vacancies in August, the hiring rate was at its lowest level since 2013 (excluding the pandemic period). An index from the Institute for Supply Management revealed that the proportion of manufacturers adding jobs fell to its lowest since May 2020.
Wage growth slowed in September. For those switching jobs, income grew 6.6% year-over-year, the lowest rate since April 2021. ADP reported on Wednesday that wage increases for employees staying in their current positions slightly slowed to 4.7%.
ADP Chief Economist Nela Richardson noted that while hiring numbers grew last month, there was no corresponding increase in wages. Typically, employees changing jobs experience faster wage growth.
Various sectors are hiring, with leisure, hospitality, and construction industries seeing the most significant increases in employment. The information sector was the only industry to experience layoffs last month.
While overall layoffs remain low, some companies have recently announced layoff plans. CVS Health (CVS, Financial) plans to cut around 2,900 jobs as part of its business strategy review. Samsung Electronics is also laying off workers in Southeast Asia, Australia, and New Zealand as part of its global downsizing plan.
