US private hiring slowed to 98,000 jobs in June, ADP says
ADP said private employers added fewer jobs than economists expected in June, with health and education services accounting for nearly half the gain.
By Sarah Jenkins · Chief Macro Economics Correspondent
· 3 min read
U.S. private employers added 98,000 jobs in June on a seasonally adjusted basis, below the 110,000 gain expected by economists surveyed by Dow Jones, payroll processor ADP said Wednesday. The figure marked a slowdown from an unrevised 122,000 increase in May and pointed to a cooler pace of hiring ahead of the federal jobs report due Thursday.
The ADP report is watched by investors and policymakers as an early read on labor demand, though it is not designed to match the Bureau of Labor Statistics’ nonfarm payrolls report. CNBC reported that ADP’s figures have generally run below the government’s payroll count in recent months, while official data have continued to show broadly firm job growth this year.
Hiring in June was concentrated in services, according to ADP. Education and health services added 48,000 jobs, accounting for nearly half of the total private-sector increase. Services industries generated all but 2,000 of the month’s net new positions.
Other areas of growth were more modest. Trade, transportation and utilities added 15,000 jobs, financial activities increased payrolls by 14,000, and other services added 8,000, ADP said. Natural resources and mining shed 5,000 jobs, the only sector cited by ADP as posting a decline.
Leisure and hospitality added 2,000 positions in June, extending a subdued year for an industry often viewed as a gauge of household spending conditions. The limited gain in that sector suggests employers tied to travel, dining and entertainment remained cautious in adding staff, based on ADP’s data.
Pay growth held steady for job stayers
ADP said annual pay gains for workers who remained in their jobs were unchanged at 4.4% in June. Workers who changed jobs saw pay growth edge up to 6.6%, maintaining a premium for switchers even as overall job creation eased.
Nela Richardson, ADP’s chief economist, said the hiring figures reflected both demand and supply pressures in the labor market. “The pace of hiring is telling a story of both supply and demand. We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries,” Richardson said. “For now, the overall effect is a slowdown in job creation.”
Small businesses accounted for a large share of the reported employment gains. ADP said firms with fewer than 50 employees added 53,000 jobs. Businesses with 500 or more employees added 25,000, while mid-sized companies increased employment by 29,000.
The release lands one day before the Bureau of Labor Statistics is scheduled to publish the June nonfarm payrolls report, the main U.S. employment benchmark for financial markets. Economists expect total payrolls to rise by 115,000, according to the Wall Street consensus cited by CNBC, with the unemployment rate holding at 4.3%.
Average hourly earnings in the government report are expected to rise 0.3% from the prior month and 3.5% from a year earlier. Wage data remain central to the inflation outlook because sustained pay growth can affect household income, consumer spending and business costs.
This story draws on original reporting from CNBC.
