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Job growth came in below forecasts

According to ADP private payrolls data, U.S. companies created 38,000 new jobs in August. July's figure was revised up to 46,000, while economists had expected 47,000. Even so, payroll growth remained in positive territory, though it marked the smallest monthly increase since January.

The sector breakdown showed hiring was not broad-based. Education and health services accounted for the bulk of the increase with 45,000 jobs, while leisure and hospitality added 16,000 and construction contributed 12,000. Many other areas, meanwhile, saw job losses.

Which sectors stood out?

  • Education and health services: 45,000
  • Leisure and hospitality: 16,000
  • Construction: 12,000

Sectors that posted losses

  • Manufacturing: -17,000
  • Professional and business services: -16,000
  • Natural resources and mining: -5,000
  • Trade, transportation and utilities: -5,000

What does the picture look like by company size?

Nearly all of August's net gain came from large employers. Businesses with 500 or more employees added 34,000 jobs, while small companies with fewer than 50 workers increased payrolls by just 3,000. The trend suggested hiring appetite was concentrated especially among bigger firms.

Wage growth unchanged

In August, ADP began separating wage data into base pay and gross pay, which includes items such as tips, bonuses and commissions. For workers who stayed in the same job, base pay rose 3% year over year and gross pay increased 4.4%; both rates were unchanged from July. For all workers, the increases were 3.2% and 4.7%, respectively.

Markets now turn to the official jobs data

The ADP report is closely watched as an early signal ahead of Friday's Bureau of Labor Statistics (BLS) nonfarm payrolls report. The market expects August nonfarm payrolls to rise by 53,000 after July's decline of 23,000. The unemployment rate is forecast to hold steady at 4.1%.

The latest data reinforced signs that momentum in the U.S. labor market remains under pressure, while shifting investor attention to how the official jobs figures could affect monetary policy and market expectations.

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