The US private sector created 38,000 new jobs in August, below the 47,000 expected by the market and the 46,000 recorded in July, according to data released by ADP on September 2. This was the lowest growth since January, reflecting an economy in "not firing, not hiring" mode, with the labor market showing increasingly less vigor.
Gains were concentrated mainly in healthcare and education, which added 45,000 jobs, leading by sector. Tourism and hospitality created 16,000 positions and construction another 12,000. Conversely, industry lost 17,000 positions, professional and business services fell by 16,000, while mining extraction, trade, transportation, and public services each recorded losses of 5,000 jobs.
For investors, this weak labor market reading can be interpreted positively, as it reduces the odds of an interest rate hike by the Federal Reserve as early as September. The widespread perception is that the central bank will need to raise rates due to persistent inflation, but weak employment data diminishes that probability at least in the short term.
Official data on the US labor market, which also includes the public sector, will be released on Friday. Analysts and investors point to gains of about 53,000 new jobs, after July recorded a decline of 23,000 positions.
