US employers in the private sector added an estimated 89,000 jobs in September, a much lower total than expected and a potential indication of a sharp pullback in the labor market, payroll processor ADP reported Wednesday. The September tally landed well below economists’ estimates for 153,000 jobs added, as well as August’s upwardly revised total of 180,000 jobs added. It’s the slowest pace of job growth reported by ADP since January 2021. “We are seeing a steepening decline in jobs this month,” said Nela Richardson, chief economist at ADP, in a statement Wednesday morning. “Additionally, we are seeing a steady decline in wages in the past 12 months.” Annual pay increases for people who remained at their jobs were 5.9%, the slowest gains since October 2021; and were 9.5% for “job changers.” The leisure and hospitality sector continued to lead job growth, with an estimated 92,000 positions added during the month. The largest declines were in professional and business services; trade, transportation and utilities; and manufacturing, according to ADP. Large businesses with 500 or more employees drove the decline, losing 83,000 jobs. The ADP report is an independent measure of employment trends and is developed using anonymized and aggregated payroll data from its clients. While ADP’s tabulations don’t always correlate with the official federal jobs report — due out Friday — it’s sometimes viewed as a proxy for overall hiring activity, which has been gradually easing. Still, data can be bumpy on a month-by-month basis. On Tuesday, the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey report for August showed that the number of available jobs unexpectedly bolted higher, rattling markets. However, economists were quick to note that the underlying trend remains one of cooling. “We’ve seen other times when we’ve had a relatively weak private sector number sandwiched between two stronger months,” Richardson said during a call with reporters. “So it’s still too early to call this a consistent slowdown in the labor market.” Economist Ian Shepherdson at Pantheon Macroeconomics brushed off Wednesday’s ADP payroll estimates, calling them “unreliable.” “Errors since last August, relative to the initial official private payroll print, have ranged from an undershoot of 337,000 in January to an overshoot of 348,000 in June, with a mean absolute error of 85,000,” he wrote. “Sometimes ADP is just about dead right, as in August and May this year, but ‘good’ months have then tended to be followed by big misses, for no apparent reason.” Shepherdson said there is “zero statistical justification” for changing Pantheon’s forecast of 175,000 jobs added for the upcoming jobs report. The BLS is set to release the all-important monthly jobs report for September at 8:30am ET on Friday. Economists are expecting a net gain of 170,000 jobs, according to Refinitiv consensus estimates. This story is developing and will be updated.