Phew, May's ADP data fell short of expectations! Is This A Good Indicator?
Private employment growth in the US slowed more than expected in May, based on a report from ADP on Wednesday that showed a continued slowdown in the labor market.The payroll processing firm reported that companies added 152,000 jobs in the month, lower than the downwardly revised 188,000 jobs in April and below the Dow Jones consensus estimate of 175,000. This is the lowest monthly level since January.Along with the slowdown in job creation, annual wage growth remained at 5%, where it has been for three consecutive months."Job and wage growth is slowing as we enter the second half of the year," said ADP's Chief Economist, Nela Richardson. "The labor market is strong, but we remain on the lookout for significant weaknesses related to both producers and consumers."Almost all hiring was from the service sector, with goods manufacturers contributing just 3,000 to the total.Trade, transportation, and utilities led the way with 55,000 new jobs, while education and health services added 46,000 and construction accounted for 32,000. Other service categories added 21,000, but the tourism and hospitality sector, the main contributor over the past few years, only posted an increase of 12,000.Several sectors experienced job losses during the month. The manufacturing sector, which has been in contraction for most of the past year and a half, lost 20,000 jobs. Other sectors that experienced declines included natural resources and mining (-9,000), information (-7,000) and professional and business services (-6,000). Small businesses also saw a decline, with companies employing between 20 and 49 workers down by 36,000.The report comes two days before the more closely watched nonfarm payrolls report from the Bureau of Labor Statistics. The ADP report can sometimes provide a rough idea of what will be seen in the BLS report, although the two counts can differ, sometimes drastically. The ADP report showing private payrolls growth of 188,000 in April exceeded the BLS count of 167,000.Wall Street economists expected nonfarm payrolls to grow by 190,000 in May after rising by 175,000 the previous month. However, several indicators have recently shown signs of a slowdown in hiring, and the BLS report on Tuesday showed that job openings fell to just over 8 million in April, the lowest level since February 2021.
Private employment growth in the US slowed more than expected in May, based on a report from ADP on Wednesday that showed a continued slowdown in the labor market.
The payroll processing firm reported that companies added 152,000 jobs in the month, lower than the downwardly revised 188,000 jobs in April and below the Dow Jones consensus estimate of 175,000. This is the lowest monthly level since January.
Along with the slowdown in job creation, annual wage growth remained at 5%, where it has been for three consecutive months.
"Job and wage growth is slowing as we enter the second half of the year," said ADP's Chief Economist, Nela Richardson. "The labor market is strong, but we remain on the lookout for significant weaknesses related to both producers and consumers."
Almost all hiring was from the service sector, with goods manufacturers contributing just 3,000 to the total.
Trade, transportation, and utilities led the way with 55,000 new jobs, while education and health services added 46,000 and construction accounted for 32,000. Other service categories added 21,000, but the tourism and hospitality sector, the main contributor over the past few years, only posted an increase of 12,000.
Several sectors experienced job losses during the month. The manufacturing sector, which has been in contraction for most of the past year and a half, lost 20,000 jobs. Other sectors that experienced declines included natural resources and mining (-9,000), information (-7,000) and professional and business services (-6,000). Small businesses also saw a decline, with companies employing between 20 and 49 workers down by 36,000.
The report comes two days before the more closely watched nonfarm payrolls report from the Bureau of Labor Statistics. The ADP report can sometimes provide a rough idea of what will be seen in the BLS report, although the two counts can differ, sometimes drastically. The ADP report showing private payrolls growth of 188,000 in April exceeded the BLS count of 167,000.
Wall Street economists expected nonfarm payrolls to grow by 190,000 in May after rising by 175,000 the previous month. However, several indicators have recently shown signs of a slowdown in hiring, and the BLS report on Tuesday showed that job openings fell to just over 8 million in April, the lowest level since February 2021.
