Private sector employment cools slightly

Private sector hiring boomed in July, but the pace of jobs growth did slow from the previous month, according to ADP's latest employment report.

By the numbers: Private employers added 324,000 jobs to payrolls, down from the 455,000 added in June (which was revised lower by 42,000 jobs).

• Pay growth continued to recede. The median change in annual pay from a year ago among job-stayers was 6.2%, down from 6.4% in June. Among job-switchers, annual pay rose 10.2%, down a full percentage point from June.

Why it matters: The data, compiled from payroll processor's trove, suggests cooler hiring conditions underway among private firms. At the same time, employment and pay trends remain strong across most industries.

• The consistent exception is manufacturing, which shed payrolls for the fifth straight month. Meanwhile, leisure and hospitality continued to lead the way in hiring.

What they're saying: "The economy is doing better than expected and a healthy labor market continues to support household spending," Nela Richardson, ADP's chief economist, told reporters Wednesday.

• "We continue to see a slowdown in pay growth without broad-based job loss."

Worth noting: Following a revamp of the report last year, ADP's numbers aren't intended to forecast the government's official jobs release, Richardson said.

• That survey-based report, out Friday, is expected to show the economy added 200,000 jobs in July.
• June's blowout ADP number led some economists (and financial markets) to believe the labor market was heating back up. Subsequent data from the government suggested that wasn't the case.

The bottom line: "This is a data point whose motivation is to accurately represent private sector employment, not predict Friday's numbers," Richardson said.