American businesses expanded their payrolls less than expected, a key measure of private sector hiring indicated Wednesday.
ADP Research said that private payrolls rose by 44,000 in July, missing estimates for 65,000 jobs. The prior month’s estimate was revised down slightly from 98,000 to 95,000.
The lower-than-expected payroll growth may not reflect a lower demand for labor but a lower supply of available workers. The report showed wage growth for workers who switched jobs picked up to the strongest pace in nearly a year, a sign that demand may be outstripping supply.
“Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market. Typical hiring patterns, meanwhile, are changing as employers react to shifting macro-economic conditions,” ADP economist Nela Richardson said in a statement.
Estimates of how many jobs the economy needs to add in order to keep unemployment steady have fallen significantly thanks to stricter enforcement of immigration laws and deportations. By some estimates, the so-called “break-even” rate of job growth may be as low as zero.
The mining and natural resources sector shed 6,000 jobs in July, according to ADP. This may reflect falling oil and gasoline prices. Construction added 1,000 jobs and manufacturing added 2,000.
Perhaps the most surprising part of Wednesday’s report is leisure and hospitality shedding 11,000 jobs in July. This could reflect some employers reversing World Cup-related hiring in July.
Trade, transportation, and utilities also shrank in July. All other services sectors expanded payrolls.
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