Private Sector Hiring Slows Sharply in August as Job Cuts Mount — Evening Brief – 09.04.25  

U.S. private sector employment increased by only 54,000 in August, well below the 68,000 consensus and less than half of July’s 106,000 gain (revised up slightly from 104,000), according to ADP data. The slowdown highlights a labor market losing momentum under the weight of tariffs, tighter and consumer caution. 

Wage growth showed little change: job stayers saw 4.4% annual pay growth, steady from July, while job switchers gained 7.1%, up marginally from 7.0%. ADP chief economist Nela Richardson noted that the year’s early hiring strength has been “whipsawed by uncertainty,” citing both labor shortages and shifting corporate behavior. 

The juxtaposition of slowing job creation with sticky wage growth complicates the Federal Reserve’s policy outlook. Still, investors view the cooling jobs market as sufficient to tip the Fed toward easing: CME FedWatch shows markets fully pricing a 25-basis point cut on September 16–17, which would lower the funds rate to 4.00%–4.25%. Odds of a follow-on cut in October have also drifted higher.   

Sector details revealed uneven conditions. Services added 42,000 jobs, led by leisure and hospitality (+50,000), construction (+16,000), and professional/ business services (+15,000). Offsetting losses came from trade, transportation, and utilities (-17,000), education and health services (-12,000), and manufacturing (-7,000). By employer size, medium-sized firms hired most (+25,000), while small businesses added 12,000 and large firms added 18,000. 

The Challenger, Gray & Christmas survey painted an even starker picture. U.S. employers announced 85,979 job cuts in August, up 39% from July and 13% above August 2024. So far this year, announced layoffs total 892,362—already surpassing the full-year 2024 total by 17% and marking the highest year-to-date figure since the pandemic-driven wave of 2020. 

The combination of sluggish hiring, elevated layoff announcements, and resilient wages signals a fragile equilibrium. Rates markets are preparing for cuts, but credit markets face growing refinancing risks, and equities are likely to see higher volatility as growth expectations are recalibrated. The labor market is now a potential source of instability that could accelerate repricing across U.S. Treasuries, corporate credit, and equities in the months ahead.