ADP Automatic Data Processing Inc

By Xavier Fontdegloria

The U.S. private sector continued to add jobs in November, albeit at a slower pace than in the previous month, adding to signs of a cooling job market.

Employment in the nonfarm private sector rose by 127,000 in November after a 239,000 increase in October, according to data in the ADP National Employment Report released Wednesday. This marks the lowest job creation level since January 2021.

The reading missed economists' expectations, which forecast a gain of 190,000 in a poll by The Wall Street Journal.

November's hiring slowdown was led by construction and other interest-rate-sensitive sectors, the data showed.

"Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains," said Nela Richardson, chief economist at ADP.

Companies are no longer in hyper-replacement mode, while fewer people are quitting and the postpandemic recovery is stabilizing, she said.

The ADP estimate is based on aggregated payroll data of more than 25 million U.S. workers and is independent from the Labor Department official data. The report's methodology has been upgraded and developed with the Stanford Digital Economy Lab. Before the change in methodology, the ADP series could diverge considerably from the Labor Department's data.

Medium-sized businesses were the only ones that increased employment, adding 246,000 to payrolls. Small businesses lost 51,000 jobs, while large businesses shed 68,000 jobs, the data showed.

By sector, services providers overall gained 213,000 jobs, but there were big differences among industries. Consumer-facing segments such as health care and hospitality were bright spots, but others such as professional and business services lost jobs.

Goods producers shed 86,000 jobs in total, with the manufacturing sector losing 100,000 jobs and construction payrolls declining by 2,000. Payrolls related to natural resources and mining increased by 16,000.

Annual pay growth remained elevated. Pay rose 7.6% in November, slightly down from the 7.7% on-year increase in October, according to ADP. Pay data is based on the salaries of almost 10 million individual employees over a 12-month period.

The U.S. Labor Department is expected to release its November employment report on Friday. Economists polled by The Wall Street Journal expect nonfarm payrolls to increase by 200,000, and the unemployment is forecast to remain at 3.7%.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

November 30, 2022 08:52 ET (13:52 GMT)

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