US private-sector employment increased less than expected in July as the gains were concentrated in just services, ADP (ADP) data showed Wednesday, ahead of the official nonfarm payrolls report for the month due later in the week.
Private employers added 44,000 jobs in July, below the 65,000 increase expected in a survey compiled by Bloomberg. The hiring total for June was revised to 95,000 from 98,000, ADP said.
The services sector added 47,000 jobs last month, while employment in the goods-producing sector saw a drop of 3,000.
"The slowdown in the monthly employment gain reported by ADP aligns with our assumption that the labor market isn't in a period of overheating," Matthew Martin, senior US economist at Oxford Economics, said in remarks e-mailed to. "Nor is it a cause for concern, as the number is still within range of our estimate of the breakeven pace of monthly employment growth consistent with stable unemployment."
Data from the Bureau of Labor Statistics are likely to show Friday that the US economy added 88,000 nonfarm jobs last month, compared with a 57,000 increase reported for June, according to a Bloomberg-compiled survey. The unemployment rate is seen unchanged at 4.2%.
Annual wage growth for job changers hit 7% in July, the biggest jump since August, while pay gains for job stayers held steady at 4.4%, the ADP report showed Wednesday.
"Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market," ADP Chief Economist Nela Richardson said. "Typical hiring patterns, meanwhile, are changing as employers react to shifting macro-economic conditions."
Regarding wage growth for job switchers, Martin said he wouldn't jump to any conclusion based on just one of month of data.
"The quits rate -- a good barometer for workers' confidence in the market -- hasn't budged as of the latest data," he said. "We continue to believe the labor market won't be a source of inflationary pressure."
Last week, the US central bank's policy committee said "job gains have kept pace with the workforce, and the unemployment rate has changed little." The Federal Reserve held its policy rate steady for a fifth time at the meeting, in a divided decision that included three officials calling for a hike.
Price: $267.86, Change: $-2.76, Percent Change: -1.02%