The ADP national employment report shows an increase of 99,000 jobs in August after a downward revision of up 111,000 in July. The August increase is below the consensus of up 140,000 in the Econoday survey of forecasters. Although private payrolls continue to rise overall, the pace of increases is moderating. Job gains are broad-based, but not universal.

Payrolls in the good-producing sector are up 27,000 in August, mainly reflecting a gain of 27,000 in construction, with natural resources/mining up 8,000 and manufacturing down 8,000. Despite slower new home construction, home renovation and repair remains active and some builders may be hiring in anticipation of a rebound in demand now that mortgage rates are more affordable.

Service-providers' payrolls are up 72,000 in August. Gains are modest at up 29,000 in education/health services, up 20,000 in"other" services, up 18,000 in financial activities, up 14,000 in trade/transportation/utilities, and up 11,000 in leisure/hospitality. There are decreases of 16,000 and 4,000 in professional/business services and information, respectively. The latter two may be related to widespread layoffs in the tech sector as businesses cut costs and/or turn to AI tools.

Payrolls by establishment size in August show small firms down 9,000 (1-49 employees), medium firms up 68,000 (50-499 employees), and large firms up 42,000 (500+ employees). Some smaller firms may be finding it harder to compete for workers with the right skills and experience or cutting jobs as the economic outlook is more uncertain.

In August, the median year-over-year change for annual pay for job-stayers is up 4.8 percent, the same as in July. For job-changers, the median annual increase is 7.3 percent, also the same as in the prior month. Pay gains remain solid. There is still some incentive for workers to change jobs for higher compensation, but the softening in the job market may convince some workers to stay where they are and accept lower pay increases in favor of greater security.

Forecasters see ADP's August employment number at 140,000. This would compare with July growth in private payrolls reported by the Bureau of Labor Statistics of 97,000. ADP's number for July was 122,000.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.