The number of jobs added by American businesses last month was the lowest since the beginning of 2021, further indicating that the labor market is entering a slowdown phase.

In August, the ADP employment number in the United States increased by 0.099 million, lower than the expected increase of 0.145 million, the smallest increase since January 2021. The previous value was revised down from 0.122 million to 0.111 million. The subsequently released initial jobless claims for the week ending August 31st in the United States recorded 0.227 million, lower than the expected 0.23 million. The revised previous value was 0.231 million, revised up to 0.232 million.

After the release of ADP data, spot gold continued to rise, reaching $2520 per ounce, up 1% intra-day. The US dollar index fell short-term, falling below 101. The US dollar against the Japanese yen fell nearly 50 points in the short term, down more than 0.5% intra-day, falling below 143, a new low since early August. The yield on US two-year Treasury bonds fell to 3.733%, the lowest level since May 2023. US stock index futures fell, with Nasdaq 100 index futures falling to the daily low.

Looking at the specific data broken down by industry,

In August, employment in the financial services industry increased by 0.018 million, compared to an increase of 0.014 million in July. The median wage growth rate was 5.0%, the same as in July.

In August, employment in the manufacturing industry decreased by 0.008 million, compared to a decrease of 0.004 million in July. The median wage growth rate was 4.7%, the same as in July.

In August, employment in the professional/business services industry decreased by 0.016 million, compared to an increase of 0.037 million in July. The median wage growth rate was 4.7%, the same as in July.

In August, the employment in the construction industry increased by 0.027 million people, compared to an increase of 0.039 million people in July; the median annual wage growth rate was 5.2%, compared to 5.3% in July.

In August, the employment in trade/transportation/utilities increased by 0.014 million people, compared to an increase of 0.061 million people in July; the median annual wage growth rate was 4.5%, compared to 4.6% in July.

The ADP report shows that the US labor market continued to cool in August. Private sector employment growth has slowed for the fifth consecutive month, while wage growth remains stable, with a quit rate of 4.8% and a job switch rate of 7.3%.

Nela Richardson, Chief Economist at ADP, said that after two years of significant growth, the downward trend in the US job market has resulted in a recruitment rate below normal levels. The next indicator to watch is wage growth, which is stabilizing after a sharp slowdown following the pandemic.

Adam Button, analyst at Forexlive, analyzed the August ADP data and stated that more and more evidence suggests that the US job market is cooling down.

Due to the reluctance to lay off employees, companies are reducing recruitment to cope with high costs and interest rates. The latest private employment data further confirms the slowdown in labor demand, which helps further curb price pressures.

Federal Reserve officials have stated that the risks facing the labor market have replaced inflation as their top concern. In addition to layoffs, almost all indicators show that the labor market in the United States is much weaker than it was last spring. Job vacancies have sharply decreased, recruitment has slowed down, unemployment has risen, and the time it takes for people to find jobs has increased.

As price pressures have significantly decreased since the peak of the pandemic, it is expected that policymakers will begin easing monetary policy this month. The market is now speculating about the magnitude of the interest rate cut, and the official non-farm payroll data on Friday is expected to have a decisive impact.

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