Private Sector Job Growth Slows, ADP Report Shows

ADP National Employment Report: July 2024 Jobs and Pay Insights

The July ADP National Employment Report reveals a moderate increase in private sector employment, with 122,000 jobs added during the month. This figure falls short of the estimated 147,000 jobs, indicating a potential slowdown in job creation.

Sector-Specific Job Changes

The goods-producing sector added 37,000 jobs, with construction leading at 39,000 new positions. Manufacturing, however, saw a decline of 4,000 jobs. The service-providing sector contributed 85,000 jobs, with trade/transportation/utilities showing the strongest growth at 61,000 jobs. Professional/business services experienced a significant decline of 37,000 jobs.

Regional Employment Trends

Regionally, the South led job creation with 55,000 new positions, followed by the West with 32,000, the Northeast with 21,000, and the Midwest with 17,000 jobs. Within these regions, the South Atlantic and Middle Atlantic areas showed the strongest growth.

Employment by Establishment Size

Large establishments (500+ employees) added 62,000 jobs, while medium-sized establishments (50-499 employees) contributed 70,000 jobs. Small establishments (1-49 employees) saw a decrease of 7,000 jobs, with the 20-49 employee category experiencing the most significant decline.

Pay Insights

Annual pay growth for job-stayers slowed to 4.8%, the lowest rate in three years. Job-changers saw a more substantial deceleration, with pay gains dropping to 7.2% from 7.7%. This trend aligns with the Federal Reserve’s efforts to curb inflation.

Industry-Specific Pay Changes

In the goods-producing sector, construction workers experienced the highest pay increase at 5.3%. Within service-providing industries, education/health services led with a 5.2% increase, closely followed by financial activities and other services at 5.0% each.

Pay Changes by Firm Size

Medium-sized firms (50-249 employees) offered the highest pay increases at 5.0%, while small firms with 1-19 employees had the lowest at 4.1%.

Expert Commentary

Nela Richardson, ADP’s chief economist, notes that the slowing wage growth aligns with the Federal Reserve’s inflation-control efforts. She suggests that if inflation rises again, it’s unlikely to be due to labor market pressures.

This report provides valuable insights into the current state of the U.S. private-sector labor market, showing a moderation in both job growth and wage increases. These trends may influence future monetary policy decisions and economic forecasts.