Hiring and pay increases in the private sector slowed in January.
Employees who changed jobs saw a 7.2% boost in pay, the smallest annual increase since May 2021, according to the ADP National Employment Report produced by the ADP Research Institute and the Stanford Digital Economy Lab. Those who stayed in the same job gained 5.2%, down from 5.4% in December, according to the release.
“The hiring slowdown of 2023 spilled into January, and pressure on wages continues to ease,” ADP said in the release. “The pay premium for job-switchers shrank to a new low last month.”
All but one of the 10 industry sectors defined by ADP added jobs in January, per the report.
The one exception was the information sector, which lost 9,000 jobs.
The sectors making the biggest gains were leisure/hospitality, trade/transportation/utilities and construction, which added 28,000, 23,000 and 22,000 jobs, respectively.
“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay,” ADP Chief Economist Nela Richardson said in the release. “Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally.”
This news comes a day after the U.S. Bureau of Labor Statistics (BLS) reported that the number of people quitting their jobs dropped to a three-year low of 3.392 million in December.
At the same time, the number of job openings — while topping 9 million for the first time in months — remained virtually unchanged from the 8.9 million openings of the previous month, according to the BLS’ monthly Job Openings and Labor Turnover Survey (JOLTS).
It was reported on Jan. 14 that economists are less confident that the U.S. will see a recession, while also expecting the economy to grow at a much slower rate this year.
Economists surveyed by The Wall Street Journal (WSJ) reduced the probability of a recession within the next year to 39%, down from 48% in October. They also expect the economy to grow 1% this year, down from the estimated 2.6% last year.