Private hiring cooled in June as ADP counted 98,000 new jobs
ADP said private employers added fewer jobs than expected in June, with health and education roles driving nearly half the gains.
By Maya Okafor · Markets Writer
· 3 min read
U.S. companies added 98,000 jobs in June, ADP said Wednesday, a softer reading than economists expected and another sign that hiring may be cooling. For everyday investors, the report offers an early look at the labor market before the government’s broader jobs data, which can shape how markets read the strength of the economy.
The payroll processing firm said private-sector employment, meaning jobs at non-government employers, rose by a seasonally adjusted 98,000 for the month. Seasonally adjusted means the data is smoothed to account for recurring calendar patterns, such as school schedules and holiday hiring.
The June gain was below May’s unrevised increase of 122,000 and missed the Dow Jones consensus forecast of 110,000, according to ADP. The Bureau of Labor Statistics is set to release its nonfarm payrolls report Thursday. Nonfarm payrolls track most U.S. jobs except farm workers and a few other categories, and that government report is usually the labor number markets watch most closely.
ADP’s private-payroll count has generally come in below the government’s official jobs report in recent months, while the Bureau of Labor Statistics has shown mostly solid job growth this year, according to ADP’s report context.
Health and education carried the month
Job creation was concentrated in services, the part of the economy that includes industries such as health care, education, finance, trade and hospitality. ADP said all but 2,000 of June’s new jobs came from service-providing employers.
Education and health services added 48,000 jobs, nearly half the total gain for the month, according to ADP. The sector has been a steady driver of payroll growth.
Other industries also added workers. Trade, transportation and utilities gained 15,000 jobs, financial activities added 14,000, and other services increased by 8,000, ADP said.
Natural resources and mining fell by 5,000 jobs, making it the only listed sector to post a decline. Leisure and hospitality added 2,000 jobs, continuing what ADP described as a slower year for an industry often watched as a signal of consumer demand.
“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,” ADP chief economist Nela Richardson said. “For now, the overall effect is a slowdown in job creation.”
Pay gains held up for job stayers
ADP said annual pay growth for workers who stayed in their jobs was unchanged at 4.4%. Pay gains for workers who changed jobs moved up to 6.6%.
Small businesses accounted for the largest share of hiring by company size. ADP said employers with fewer than 50 workers added 53,000 jobs. Companies with 500 or more employees added 25,000, while midsize employers added 29,000.
Wall Street’s consensus estimate for Thursday’s government report calls for nonfarm payrolls to rise by 115,000 in June, with the unemployment rate holding at 4.3%. Average hourly earnings are expected to increase 0.3% from the prior month and 3.5% from a year earlier.
This story draws on original reporting from CNBC.
