[News] ADP Report Shows Slowdown of Labor Market, while ISM Services PMI Remains in Expansion

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The U.S. non-farm payroll data for August is set to be released on September 6. Ahead of that, the ADP employment report, often referred to as the “mini-NFP,” was published on September 5. The report revealed that private-sector employment in the US rose by 99,000 jobs in August, significantly lower than the market expectation of 145,000, marking the lowest level since 2021 and signaling a further slowdown in the labor market. This has heightened speculations that the Federal Reserve might increase the scale of rate cuts.

The ISM Services PMI, which was released on the same day, presented a more optimistic picture. The August Services PMI came in at 51.5 (previously 51.4), slightly higher than the market expectation of 51.3, remaining in expansion territory for the second consecutive month.

Breaking down the sub-indices, the employment index fell to 50.2 (previously 51.1), in line with the ongoing labor market slowdown but still indicating growth. The new orders index rose to 53.0 (previously 52.4), and the supplier delivery time index increased to 49.6 (previously 47.6), reflecting continued strong demand for services. However, the business activity index dropped to 53.3 (previously 54.5), suggesting that high interest rates and costs are still exerting some negative pressure on business operations. Despite this, all indices remained in expansion, indicating that the overall services sector is still experiencing stable growth.

 

 

In the commentary from managers surveyed, industries with rising demand (such as finance, information, entertainment, and healthcare) reported continued improvement or strength in business activity. Conversely, sectors with declining demand (such as construction, utilities, and wholesale trade) cited high interest rates and cost pressures as factors weakening business activity. Some companies in these sectors are also conducting layoffs or reducing hiring. Overall, while the demand in the services sector is significantly stronger than in manufacturing, there are still signs of uneven recovery across industries.