Construction: 27,000 jobs
Professional and Business Services: 25,000 jobs
Other Services: 16,000 jobs
Trade, Transportation, and Utilities: 15,000 jobs
Conversely, several sectors experienced declines:
Natural Resources and Mining: -8,000 jobs
Manufacturing: -5,000 jobs
Information: -3,000 jobs
ADP’s chief economist, Nela Richardson, highlighted that while job growth has been solid, it has not been widespread. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month,” she said.
Wage Growth and Job Creation Factors
The pace of wage increases for those staying in their jobs also slowed, with a year-over-year rise of 4.9%, marking the smallest increase since August 2021. For job switchers, wage growth was at 7.7%, continuing a downward trend.
Job creation was most prominent among mid-sized companies (50-499 employees), which added 88,000 jobs. Small businesses contributed just 5,000 jobs. Geographically, the South led with 80,000 new jobs, accounting for more than half of the total growth.
Looking Ahead to Nonfarm Payrolls Report
ADP’s report often serves as a precursor to the more comprehensive nonfarm payrolls data from the Labor Department, which is due on Friday. The upcoming report is expected to show an addition of 200,000 jobs, following May’s 272,000. Historically, ADP’s estimates tend to be lower than the official Bureau of Labor Statistics (BLS) counts. In May, the BLS reported private payroll growth of 229,000, surpassing ADP’s figure by 72,000.
Market Forecast: Bearish Outlook for Economy
Given the slowdown in private payroll growth and the modest wage gains, the short-term outlook for the labor market appears bearish. The cooling pace of job additions, particularly outside leisure and hospitality, suggests caution among employers, potentially reflecting broader economic uncertainties. Traders should remain vigilant as the forthcoming nonfarm payrolls report may provide further insights into the labor market’s health.
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