Private sector job growth slowed significantly in May, with payrolls increasing by just 37,000, the lowest level in over two years, according to the ADP National Employment Report. This figure fell far below the Dow Jones forecast of 110,000 and marked a drop from the revised 60,000 jobs added in April. Nela Richardson, chief economist at ADP, commented, “After a strong start to the year, hiring is losing momentum.”
The report highlighted losses in several key sectors.
Goods-producing industries saw a net loss of 2,000 positions, with reductions in natural resources, mining, and manufacturing. The services sector had mixed results, with leisure and hospitality adding 38,000 jobs and financial activities growing by 20,000, while professional and business services, education, health services, trade, transportation, and utilities all experienced job losses. Small companies with fewer than 50 workers saw a reduction of 13,000 jobs, and large firms with 500 or more employees reported a drop of 3,000 jobs.
Mid-size companies, however, gained 49,000 positions.
Hiring momentum slows across sectors
President Trump called on the Federal Reserve to lower interest rates in response to the labor market slowdown.
“ADP NUMBER OUT!!! ‘Too Late’ Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!” Trump commented. The ADP report precedes the more closely watched nonfarm payrolls count from the Bureau of Labor Statistics, which is expected to show a gain of 125,000 jobs and an unchanged unemployment rate of 4.2%.
While the ADP and BLS figures can often differ, ADP’s report provides another perspective on the employment situation amid growing concerns about broader economic conditions. Fed officials have recently expressed concerns about the economic impact of ongoing tariffs, particularly on inflation and employment. Fed Governor Lisa Cook stated, “I see the U.S. economy as still being in a solid position, but heightened uncertainty poses risks to both price stability and unemployment.
The Federal Reserve is expected to maintain current interest rates when they meet in two weeks.
