November ADP Shows Slower Hiring, Rising Wages Pose Inflation Concerns
1min read The private sector added 146,000 jobs in November, according to the latest ADP report. This marked a slowdown from the revised 184,000 jobs added in October and fell short of economists' expectations of 163,000 new jobs. While overall job growth remained positive, the performance across industries was mixed.
The data revealed varying results depending on company size. Larger firms, with more than 500 employees, showed the most resilience in the labor market, adding the most jobs. In contrast, smaller businesses, with fewer than 50 employees, experienced net job losses overall.
ADP Chief Economist Nela Richardson explained, While overall growth for the month was healthy, industry performance was mixed. Manufacturing showed the weakest performance we've seen since spring, and both financial services and leisure and hospitality were also soft.
Wage Growth and Inflation Concerns
One notable trend in the report was the uptick in annual pay gains. Workers who stayed in their jobs saw their pay increase by 4.8% year-on-year, while job-changers experienced a 7.2% rise in their wages. This wage growth could contribute to an ongoing wage-price spiral, potentially forcing the Federal Reserve to keep restrictive interest rates in place for a longer period to control inflation.
Fed's Next Moves: Slowing Down Rate Cuts
Following the release of the ADP data, St. Louis Federal Reserve President James Bullard commented on the current state of the economy and inflation. He suggested that, given inflationary pressures and reduced concerns about the labor market, the time may have come to slow down the pace of interest rate cuts.
Bullard noted that policymakers may need to pause or slow the rate cuts soon and emphasized the importance of maintaining flexibility in monetary policy amid ongoing economic uncertainty. He also expressed a view that inflation in the U.S. would likely approach the Fed's 2% target in the next two years, but warned that the risk of loosening monetary policy too quickly could outweigh the risks of moving too slowly.
