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US private sector job gains slow in January as labor market cools / Photo: JOE RAEDLE - GETTY IMAGES NORTH AMERICA/AFP/File
US private sector job gains slow in January as labor market cools
Private sector hiring in the United States slowed more than anticipated this month, according to data Wednesday from payroll firm ADP, following efforts to cool the world's biggest economy and tame inflation.
In January, the United States added 107,000 jobs in the private sector, ADP said, down from a revised 158,000 in December.
Most employment gains were in service-providing sectors including leisure and hospitality, as well as trade, transport and utilities.
But other service industries such as information lost positions.
"Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay," said Nela Richardson, ADP chief economist, in a statement.
A resilient labor market has so far helped to support consumers and in turn, spending, even as households drew down on their pandemic-era savings and as higher interest rates raised borrowing costs.
The Federal Reserve has lifted interest rates rapidly in recent years, aiming to quell a surge in inflation by easing demand.
But as the higher rates bite and inflation comes down, analysts also expect growth to slow this year.
The central bank is mulling the best time for its first rate cut, with the policy decision from its latest meeting due later Wednesday.
- Soft landing -
For now, Richardson said: "Wages adjusted for inflation have improved over the past six months, and the economy looks like it's headed toward a soft landing in the US and globally."
In January, pay gains for those who stayed in their jobs, compared with a year prior, eased to 5.2 percent.
Workers who changed jobs also saw the smallest annual pay bump since May 2021, at 7.2 percent, said ADP.
Alongside official data, ADP figures are signaling a cooling in private job growth, said Rubeela Farooqi, chief US economist at High Frequency Economics.
She expects demand and hiring to slow further.
"But we expect job growth to remain positive and expect the unemployment rate to remain low, as monetary conditions become less tight on Fed rate cuts this year," she added.
This week, analysts are also looking to the Department of Labor's employment report, due on Friday, to take stock of the health of the jobs market.
(P.Davis--TAG)
