The private sector added just 37,000 jobs in May, the lowest increase in over two years, according to the ADP National Employment Report. This figure fell significantly short of expectations and raised concerns about a potential slowdown in economic activity. The goods-producing industries experienced a net loss of 2,000 jobs, with declines in natural resources and mining (down 5,000 positions) and manufacturing (down 3,000), partially offset by a gain of 6,000 jobs in construction.
The services sector saw mixed results, with gains in leisure and hospitality (38,000) and financial activities (20,000), but declines in professional and business services (down 17,000), education and health services (down 13,000), and trade, transportation, and utilities (down 4,000). Job losses were concentrated in small firms with fewer than 50 workers (down 13,000) and large companies with 500 or more employees (down 3,000). Mid-size firms, however, added 49,000 jobs.
Private sector’s sluggish job growth
“After a strong start to the year, hiring is losing momentum,” said Nela Richardson, chief economist for ADP. The report comes ahead of the Bureau of Labor Statistics’ nonfarm payrolls count, which is expected to show a gain of 125,000 jobs with the unemployment rate holding steady at 4.2%.
While the ADP and BLS reports often differ, the ADP data provides an important snapshot of the current labor market. Economic data has presented a mixed picture for the labor market recently, with surveys from Indeed and the National Federation of Independent Business showing weaker levels of job openings and hiring intentions. Federal Reserve officials have expressed concerns about the economic outlook, especially considering the impact of tariffs on inflation and employment.
“I see the U.S. economy as still being in a solid position, but heightened uncertainty poses risks to both price stability and unemployment,” said Fed Governor Lisa Cook. The Fed is expected to hold interest rates steady in their upcoming meeting as they assess the evolving economic landscape.
