U.S. businesses created the fewest new jobs in 7 months, ADP says. Hiring slowed in the summer.

New data from payroll processor ADP show U.S. businesses added 38,000 jobs in August, the smallest gain in seven months. It marks the second consecutive month of muted increases, signaling that employers pulled back on hiring as the summer progressed. While the labor market has remained resilient through most of this year, these figures point to a clear deceleration in private-sector payroll growth.

The ADP number is closely watched because it frequently serves as an informal preview for the Labor Department’s broader employment report. A cooling trend is significant for markets because hiring strength has been a key measure of economic health. With inflation easing, the state of the job market may weigh on how quickly policymakers adjust interest rates. Slowdowns like this can indicate that businesses are becoming more cautious in response to high borrowing costs and uncertain consumer demand.

What to watch now is whether the official government employment data echoes this softer trend. A single report doesn't establish a pattern, but two straight small gains suggest that the post-pandemic hiring boom is settling toward a more subdued pace. Consistent declines would hold more weight for economic forecasting, particularly if wage growth also slows.