In a sign the labor market may be cooling, job growth in the private sector in August slowed sharply, failing to meet economist’s expectations,

According to the latest ADP National Employment report released Wednesday, in August, the private sector only added 177,000 jobs. That is significantly less than July’s reading of 371,000, which had been revised upward by ADP.

Economists polled by Reuters forecasted the reading would come in at 195,000 jobs added, while a Dow Jones survey predicted a 200,000 unit increase in jobs.

In a statement, Nela Richardson, the chief economist with ADP said, “This month’s numbers are consistent with the pace of job creation before the pandemic.”

She added, “After two years of exceptional gains tied to the recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede.”

The ADP report attributed the slowdown in August to a significant fall in hiring in the leisure and hospitality industry. This month the industry only added, 30,000 jobs, compared to July’s increase of 201,000.

Education and health services saw the greatest growth in August, adding 52,000 positions. Trade, transportation, and utilities followed behind with 45,000 jobs.

Although the labor market has remained relatively resilient in the face of the repeated interest rate hikes by the US Federal Reserve, the sudden slowdown in private sector hiring is being hailed as the latest indication that the labor market may finally be beginning to cool.

Since early 2022, the US Federal Reserve has raised interest rates 11 times, as it has sought to bring inflation down toward its 2% target rate. Last year, inflation skyrocketed, hitting a 40-year record of 9.1% in the month of June, before easing under the weight of the central bank’s repeated rate increases.