Private sector payroll growth fell in June, according to a report Wednesday from ADP, pointing to a possible slowdown in the U.S. labor market.
Companies added 150,000 jobs during the month, below the upwardly revised 157,000 in May and the Dow Jones estimate of 160,000. The monthly total was the smallest since January.
The total would have been much lower without a big jump in employment in the leisure and hospitality sector. The sector added 63,000 jobs, the biggest gain among the categories measured by payroll processing firm ADP.
Other sectors that saw gains included construction (27,000 jobs), professional and business services (25,000 jobs), other services (16,000 jobs), and trade, transportation and utilities (15,000 jobs).
On the downside, the natural resources and mining sector showed a decline of 8,000 jobs, the manufacturing sector lost 5,000 jobs, and the information sector decreased by 3,000 jobs.
“Job growth was strong, but not broad-based,” said Nela Richardson, chief economist at ADP. “Without the rebound in employment in the leisure and hospitality sector, June would have been a dismal month.”
The pace of wage gains for those who stayed in their jobs also slowed, to 4.9% year-on-year, the smallest increase since August 2021. Those who changed jobs saw a 7.7% increase, a figure that is also trending down.
The bulk of the new jobs came from companies with 50 to 499 workers, a group that added 88,000 jobs during the month. Small businesses contributed just 5,000 jobs. Geographically, 80,000 jobs came from the South, or more than half the total.
The ADP report is a precursor to the Labor Department’s closely watched nonfarm payrolls report due on Friday. The report is expected to show 200,000 jobs added, following 272,000 in May.
The two reports often differ, sometimes dramatically, with ADP estimates consistently falling short of the BLS estimates. In May, the BLS reported that private-sector employment rose by 229,000, or 72,000 more than ADP estimated.
