Private sector employment rose by 99,000 in August while job gains in July were revised down to 111,000, said ADP in a report.
A consensus forecast by analysts had pegged growth at 150,000, according to Briefing.com.
The weaker-than-expected performance could fuel concern around the jobs market, which has been holding up in the face of high interest rates and lending support to consumer spending.
Data indicating the strength of the labor market could affect the size of upcoming Federal Reserve rate reductions, as policymakers walk a fine line between tackling inflation with high rates without triggering a downturn.
“The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth,” said ADP chief economist Nela Richardson in a statement.”The next indicator to watch is wage growth,” she added.Among goods-producing sectors, construction added jobs but manufacturing was in a slump.
On the services side, education and health services saw the most job gains.
Wage growth, meanwhile, was flat in August, said the ADP report.
The US Fed is widely expected to start lowering the benchmark lending rate at its policy meeting later this month.
For now, all eyes are on official employment data due on Friday.