Private payrolls saw a significant slowdown in September, falling well short of expectations, as reported by ADP.

The ADP report released on Wednesday indicates that private sector job growth was a mere 89,000 for the month, a notable drop from the upwardly revised 180,000 in August and falling below the economist consensus of 160,000, according to a Dow Jones poll.

What's particularly noteworthy is that this report suggests a potential loosening of the historically tight labor market, which might give the Federal Reserve reason to reconsider interest rate hikes. Additionally, ADP reported that annual wage growth decelerated to 5.9%, marking the 12th consecutive monthly decline.

It's important to note that ADP's figures can differ significantly from the government's official count, which will be released on Friday. Economists estimate that nonfarm payrolls grew by 170,000 in September, down from a 187,000 increase in August, according to Dow Jones.

The job gains in ADP's report were primarily concentrated in the services sector, contributing a net total of 81,000 jobs. Of these, the majority came from the leisure and hospitality sector, which added 92,000 jobs.

Other sectors experiencing job growth included financial activities (17,000), construction (16,000), and education and health services (10,000). However, these gains were offset by losses of 32,000 jobs in professional and business services, 13,000 in trade, transportation, and utilities, and 12,000 in manufacturing.

Nela Richardson, chief economist at ADP, commented on the report, stating, "We are seeing a steep decline in jobs this month. Additionally, we are seeing a steady decline in wages over the past 12 months."

This report comes on the heels of a Labor Department announcement that job openings unexpectedly surged in August. The results from the Job Openings and Labor Turnover Survey sent shockwaves through financial markets, raising concerns that the Fed might need to maintain a restrictive monetary policy to combat inflation.

However, the number of individuals classified as unemployed by the Labor Department also increased significantly, resulting in a decrease in the job openings-to-available workers ratio from 2 to 1 to 1.5 to 1.

ADP's report noted that job growth was most robust in companies with fewer than 50 employees, where 95,000 positions were added. Medium-sized companies contributed 72,000 jobs, while firms with 500 or more employees reported a loss of 83,000 positions.