Topline

Employment in the U.S. private sector declined again in August, according to a report released Thursday by private payroll processing firm ADP, the latest signal of job market growth cooling as President Donald Trump awaits unemployment data amid a push for interest rate cuts.

The year started with “strong job growth,” though momentum has been “whipsawed by uncertainty,” economists said in a report.

Getty ImagesKey Facts

Private sector employment increased by 54,000 jobs in August, ADP reported, falling well below July’s 106,000 added jobs and consensus economist estimates of 85,000, according to FactSet.

Jobs related to trade, transportation and utilities lost 17,000 positions month-to-month, while education and health services recorded a decline of 12,000 jobs, though a surge was reported in the leisure and hospitality industry, which tacked on 50,000 jobs in August, according to ADP.

The Labor Department reported Thursday that jobless claims ticked up to 237,000 last week, the highest level since June while up 8,000 from the prior week and higher than Wall Street’s forecast of 231,000, after the Bureau of Labor Statistics reported on Wednesday job openings for July that matched one of the lowest levels since the pandemic.

Crucial Quote

“The year started with strong job growth, but that momentum has been whipsawed by uncertainty,” Nela Richardson, ADP’s chief economist, said in a statement. Richardson said a “variety of things” could explain a private hiring slowdown, including “labor shortages, skittish consumers and AI disruptions.”

What To Watch For

The BLS will release data for nonfarm payrolls and unemployment on Friday, the first for the agency since Trump ousted commissioner Erika McEntarfer after claiming she manipulated data during the 2024 election. Economists expect unemployment to remain at 4.2% in August while 80,000 jobs are expected to have been added, according to FactSet.

Big Number

97.4%. Those are the odds of at least a quarter-point reduction to interest rates, which have sat between 4.25% and 4.5% since December, according to CME’s FedWatch.

Key Background

The Federal Reserve has pointed to a dual mandate of full employment and stabilized inflation before considering interest rate cuts, and a cooled labor market has fueled speculation the central bank will soon opt for looser monetary policy. Fed chair Jerome Powell has said the central bank would await incoming jobs and inflation data before looking at rate cuts, despite pressure from Trump and other Republican officials in recent months. Jeffrey Roach, LPL Financial’s chief economist, wrote last month he believed the Fed would cut rates as Powell and other monetary policymakers focus on the “weakening labor market.”

Further ReadingForbesJob Openings Fell In July—But Hiring Increased. Here’s What Industries Added The Most.By Ty Roush