According to ADP, the payroll giant, U.S. businesses only added 152,000 new jobs in May, indicating a potential slowdown in hiring. This figure represents the smallest increase recorded this year, falling short of economists’ expectations of 175,000 new jobs.
“Job gains and pay growth are slowing going into the second half of the year,” said ADP’s chief economist Nela Richardson. “The labor market is solid, but we’re monitoring notable pockets of weakness tied to both producers and consumers.”
The majority of new jobs originated from the healthcare and education sectors, which are less influenced by general economic patterns compared to other sectors. These sectors are sometimes referred to as “government-adjacent.”
On the other hand, there was notable growth in trade, shipping, and construction, which are often indicative of economic trends. Trade, transportation, and utilities saw an increase of 55,000 jobs, while construction added 32,000. Financial services also experienced job growth in May, with payrolls expanding by 28,000. However, information, manufacturing, professional services, and mining sectors saw a decline in jobs.
Revised data showed that job gains in April were slightly reduced to 188,000. According to ADP, employees who remained in their positions received a 5 percent pay raise over the past year, which has remained unchanged for three months. Conversely, job switchers received a 7.8 percent pay increase, although this rate has been decreasing and is expected to continue to do so. Two years ago, job switchers experienced a peak increase of 16.4 percent.
The ADP report focuses solely on private-sector hiring and is not meant to forecast the official jobs report scheduled for release on Friday. ADP states that it serves as an independent gauge of the labor market. Economists anticipate that the Labor Department will announce an addition of 195,000 jobs in May, up from April’s 175,000.
In a separate report on Tuesday, the Labor Department revealed that job openings decreased to 8.1 million, falling short of expectations and marking a significant drop from the previous month’s 8.4 million.
