(Bloomberg) -- US companies scaled back hiring in November, with manufacturers reducing headcount to the lowest level since early 2022, adding to evidence of a cooling labor market.
Private payrolls increased 103,000 last month and October’s reading was revised lower, according to figures published by the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The median estimate in a Bloomberg survey of economists called for a reading of 130,000.
Service-providing sectors, including education and health services as well as trade and transportation, drove the advance. Leisure and hospitality, which has been a major driver of job creation during the pandemic recovery, cut jobs for the first time since February 2021.
“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,” Nela Richardson, chief economist at ADP, said in the release.
She added in a call with reporters afterward that the trend is consistent with the economy reaching a soft landing in 2024 and buoys the Federal Reserve’s efforts to tamp down inflation.
S&P 500 futures rose and Treasury yields fell after the release.
Wednesday’s report adds to evidence of a gradual cooling in demand for workers. While job creation remains healthy and wage growth is once more topping inflation, employers are increasingly scaling back hiring amid high borrowing costs and lingering price pressures.
The ADP data showed a further cooling in wage growth. Workers who stayed in their job saw a 5.6% median pay bump in November from a year ago, according to the report. For those who changed jobs, wages rose 8.3%. Both figures represented the slowest pace of increase since 2021.
Job creation was concentrated in the Northeast and the South, while the West saw job losses. Mid-size firms with up to 249 employees continued to drive job gains.
The government’s monthly jobs report due Friday is forecast to show that US private employers added 160,000 jobs last month. Separate Bureau of Labor Statistics data out Tuesday showed vacancies plunged in October to the lowest level since early 2021, pointing to broad-based cooling in the labor market.
ADP’s report is based on payroll data covering more than 25 million US private-sector employees.
--With assistance from Chris Middleton and Mark Niquette.
(Updates with additional Richardson comment in fifth paragraph.)
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