The private sector added 132,000 jobs in August, an indication that the white-hot pace of hiring could be slowing after months of strong job growth.
The August number reported by payroll processing giant ADP is far below economists’ expectations of 225,000 positions added.
“We could be at an inflection point, from super-charged job gains to something more normal,” ADP chief economist Nela Richardson said in a statement.
“My takeaway from these numbers is that companies are slowing their additional headcount,” she said in a call after the report was released.
Pace of wage growth seen as plateauing, but persisting
ADP also found that annual pay rose by 7.6% — the first time its report has tracked pay, which it said encompasses gross earnings inclusive of tips, commissions and bonuses. The number indicates a higher rate of wage inflation than has been previously reported — an implication that would suggest inflation is helping to push employee compensation higher.
The report also found that people who change jobs see much larger pay increases than those who stay, with median pay for job switchers jumping by 16.1%.
That’s not great news for inflation. “The inflation picture is not really going to get better for a while,” said Dan North, senior economist at Allianz Trade.
“I believe that wage growth is directly contributing to overall inflation,” North said — a dynamic that, if it persists, could portend a much-dreaded wage-price spiral, in which expectations of higher inflation trigger ongoing increases in both worker pay and consumer prices.
Higher pay increases for people switching jobs means the elevated level of churn — the so-called