This news was preceded by ADP’s report of the slowest private sector job creation in May that saw payrolls grow by just 37,000. This is the smallest increase since March 2023. It’s a huge miss from the downwardly revised 60,000 jobs created in April. The increase was well below the Dow Jones estimate, which called for a gain of 110,000 jobs.
Nela Richardson, the chief economist for ADP shared some perspective about what’s going on in this new, different labor market. She stated, “After a strong start to the year, hiring is losing momentum.” Such stagnant levels of growth puts the future trend of employment under a dark shadow as our economy continues to pilot through choppy conditions.
The ADP report is released just two days before the Bureau of Labor Statistics releases its own nonfarm payrolls count. Analysts are looking for this report to come in with a net gain of 125,000 jobs. The civilian unemployment rate is forecasted to hold steady at 4.2%.
Small businesses, defined as those with less than 50 employees, took the biggest hit back in May according to the data. They actually lost a whopping 13,000 jobs over that month. In contrast, mid-sized firms added 49,000 positions. Companies with more than 500 employees, or large firms, registered a loss of 3,000 jobs.
Sector-specific analysis shows that goods-producing sectors were just as badly off. Together they gained over half a million jobs for the month. Of those included in this category, natural resources and mining experienced a decrease of 5,000 jobs and manufacturing decreased by 3,000. On a positive note, construction was able to add 6,000 jobs.
The incredibly tight labor market has led to a range of responses from pundits and industry watchers. Allison Shrivastava commented on the overall situation, stating, “The market remains distressingly gridlocked, with limited hiring and low quits, and the market can’t keep steadily cooling off forever before it just turns cold.”