Private sector job creation slowed more than expected in May, according to a report released Wednesday from ADP, indicating a further slowdown in the labor market.
The payroll processing company said companies added 152,000 jobs on a monthly basis, less than the downwardly revised figure of 188,000 jobs in April and below the Dow Jones estimate of 175,000 jobs. This was the lowest monthly level since January.
Along with the slowdown in job creation, annual wage growth gains have remained at 5%, where they have been for three consecutive months.
“Job gains and wage growth slow in the second half of the year,” said Nella Richardson, chief economist at ADP. “The labor market is strong, but we observe notable pockets of weakness linked to both producers and consumers.”
A waiter prepares drinks at Le Central restaurant in San Francisco, California, US, on Tuesday, May 7, 2024.
David Paul Morris | Bloomberg | Getty Images
Almost all of the hiring came from the services sector, with goods producers contributing just 3,000 net to the total.
Trade, transportation, and utilities topped the list with 55,000 new jobs, while education and health services added 46,000 jobs, and construction contributed 32,000 jobs. The other services category added 21,000, but leisure and hospitality, a major contributor over the past several years, saw an increase of only 12,000.
A number of sectors witnessed 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 saw 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 businesses employing 20 to 49 workers down by 36,000.
The report comes two days before the closely watched nonfarm payrolls report from the Bureau of Labor Statistics. ADP can sometimes provide a preview of what's coming in a BLS report, although the two censuses can differ, sometimes dramatically. An ADP report showing private payrolls grew by 188,000 in April surpassed the BLS's number of 167,000.
Wall Street economists expect nonfarm payrolls to expand by 190,000 in May after growing by 175,000 the previous month. However, a number of indicators have recently shown signs of a slowdown in hiring, and a Bureau of Labor Statistics report on Tuesday showed that job openings fell to just over 8 million in April, the lowest level since February 2021.
Correction: May's ADP number was the lowest monthly level since January. Wrong previous version a month.
