While pay growth for those staying on the job was higher than inflation at 7.2%, ADP said it was the slowest pace in a year.

What would otherwise be seen as good news has been bad news for a U.S. economy posting a consumer-level inflation rate that’s three times as high as the 2% target rate for the U.S. Federal Reserve. Steady jobs could incentivize consumer spending and drive prices even higher, while the decline in wage growth could have the opposite effect.

ADP, however, said the wage impact is negligible.

“The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term,” said Nela Richardson, the chief economist at ADP.

On Tuesday, U.S. Federal Reserve Chairman Jerome Powell was grilled by lawmakers concerned that aggressive rate hikes could create headwinds in the labor market. The Fed is using increased lending rates to curb inflation, which makes everything from housing to vehicles expensive.

That could trickle down to create headaches for the U.S. consumer, though Powell stressed that policymakers were considering a wide-range of factors when assessing rate decisions.

“We will continue to make our decisions meeting by meeting, taking into account the totality of the incoming data and their implications toward the outlook for economic activity and inflation,” he said.

Nevertheless, the Fed may consider a rate hike of 50 basis points, or 0.5%, later this month, twice as high as its previous hike, but lower than the 75 basis points that dominated 2022.

Markets were flat shortly after the opening bell on Wall Street. The Dow was down 0.05%, the S&P was flat, and the tech-heavy Nasdaq was up only 0.3% as of 9:45 a.m. EST.