US ADP employment rose 44,000 in July, below the expected 70,000 and the previous month's 98,000. Looking at the breakdown, the cooling wasn't primarily due to a sudden collapse in any one industry, but rather a cautious approach to hiring across most sectors. Manufacturing added only 2,000 jobs, down from 5,000 in June; construction added only 1,000; and trade, transportation, and utilities saw a decline of 8,000 from an increase of 15,000 in June, indicating that jobs related to the distribution of goods, the transportation chain, and end-user demand began to contract first.
However, this data is not a typical sign of recession. Professional and business services employment increased by 9,000, up from 2,000 in June, suggesting some resilience in the service sector. More importantly, wages did not cool significantly in tandem: financial services wage growth rose from 5.1% to 5.2%, manufacturing from 4.9% to 5.0%, while professional/business services and trade and transportation remained flat. This indicates that while companies are hiring less, existing employees' wages remain relatively stable.
