Businesses added just 103,000 workers to their payrolls in November, the paycheck processor ADP said Wednesday.
Economists had forecast a stronger pace of job growth, with the consensus at 128,000. The prior month’s report was revised down from 113,000 to 106,000.
The ADP report no longer attempts to anticipate the government’s official payroll report, which arrives on Friday. Last month the Labor Department said nonfarm payrolls grew by 150,000 and private payrolls expanded by just 99,000.
The Labor Department is expected to report around 180,000 jobs added in November. Private payrolls are expected to rise by 150,000.
Both reports have been suggesting that the labor market is cooling off after staying much hotter than expected for much of the year. The Federal Reserve has been explicitly aiming to bring down the demand for labor, hoping to bring supply and demand into better balance, by raising interest rates and signaling that rates will stay elevated for months to come.
The Labor Department’s report on job openings and layoffs showed on Tuesday that employers had posted 8.7 million open jobs at the end of October, down from the downwardly revised 9.35 million in the prior month. Compared with the prepandemic era, however, that is still a very high level of job openings, suggesting that the labor market remains tight.
The unemployment level has climbed to 3.9 percent, in part due to more workers entering the labor force. By historical standards, that is extremely low and suggests a very strong labor market. The Labor Department’s report on Tuesday, as well as recent jobless claims reports, have shown no significant rise in layoffs.
Manufacturing shed 15,000 workers, according to ADP, making it the biggest loser for the month. Surveys by private sector analysts and regional Fed banks have suggested a slowdown in manufacturing in recent months.
Construction employment shrank by 4,000 jobs, which could indicate a slowdown in homebuilding. Demand for new homes has been elevated by the lack of supply of existing homes for sale due to the sudden jump in interest rates after a period of very low rates on home loans.
The leisure and hospitality sector shrank by 7,000 jobs. This sector was the hardest hit by the pandemic and lockdowns and it’s recovery has been a major driver of expanded employment. Only recently has it returned to prepandemic levels of employment.
“Restaurants and hotels were the biggest job creators during the post-pandemic recovery. But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024,” said Nela Richardson, ADP’s chief economist.
Trade, transportation, and utilities added 55,000 jobs, making it the biggest source of growth in the month. Education and health services came in second place, adding 44,000 jobs. Finance added 11,000 and information technology added 4,000. Mining, which includes energy extraction, also added jobs.
Professional and business services contracted while the catchall “other services” category expanded.
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