The labor market is shedding some of the tightness it has had for the past year.
Employers added 208,000 jobs in September, according to the latest monthly survey from private payroll firm ADP released on Wednesday.
The number was slightly higher than estimates and follows August’s 132,000. Pay, meanwhile, increased 7.8% on average annually.
Job gains were strongest in the services sector of the economy, with 237,000 jobs added in trade, transportation and utilities.
“There are signs that people are returning to the labor market,” said Nela Richardson, chief economist at ADP. “We’re in an interim period where we’re going to continue to see steady job gains. Employer demand remains robust and the supply of workers is improving – for now.”
The report is the second this week, following Tuesday’s news that job openings fell by more than 1 million in August to a level of 10 million. The drop came as companies pulled back on their future hiring plans, as the pace of current hiring largely remained unchanged.
A loosening of the historically tight labor market is something the Federal Reserve is looking for as it seeks to stamp out inflation with a series of large increases in interest rates. Already, the housing market has seen a slowdown in the rate of price appreciation and a nearly 25% drop in pending home sales from a year ago.
The latest reading will not dissuade the Fed from another interest rate hike when its monetary policy committee meets in November, analysts say. The Fed wants to be sure that inflation is heading back to its goal of an annual average rate near 2%. Consumer prices rose at an 8.3% annual rate in August.
Human resources technology company UKG says that it saw a continued decline in employer activity in September. The firm is projecting that employers added 200,000 jobs last month; the U.S. Labor Department will report the monthly jobs number for September on Friday with consensus estimates of about 250,000 new jobs added.
UKG’s recovery index, measuring how the labor market is doing relative to its pre-pandemic state, now stands at 97.6, compared to August when it stood at 103.6% of August 2021 levels, “indicating a slight easing of the labor shortage as hourly employees work slightly less overtime.”
Source: US News