Private sector job growth in the US saw a slight decrease in June, raising concerns about a potential slowdown in the labor market. According to the latest report from ADP, companies added 150,000 jobs in June, falling short of the upwardly revised 157,000 jobs added in May and the Dow Jones consensus estimate of 160,000.
The data revealed that without the significant increase in hiring within the leisure and hospitality sector, the overall job market would have seen a much lower gain. Leisure and hospitality added 63,000 jobs, making it the sector with the largest increase among categories measured by ADP. Other sectors that showed growth 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).
However, there were sectors that experienced declines in job numbers, with natural resources and mining seeing a decrease of 8,000 jobs, manufacturing losing 5,000 jobs, and information sector dropping by 3,000 jobs.
ADP’s chief economist, Nela Richardson, pointed out that while job growth has been solid, it has not been evenly distributed. She noted that without the hiring rebound in leisure and hospitality, June would have been a more challenging month for job creation.
In terms of wage growth, the report showed a decrease in the pace of wage gains for those who remained in their jobs, down to 4.9% on a year-over-year basis. Job switchers saw a 7.7% increase, which is also trending lower.
The majority of job creation came from companies with 50-499 employees, adding 88,000 jobs in June, while small businesses only contributed 5,000 jobs. Regionally, the South was the leader in job creation, accounting for 80,000 of the total jobs added.
The ADP report is often seen as a precursor to the Labor Department’s nonfarm payrolls count, which is scheduled to be released on Friday. The upcoming report is expected to show an addition of 200,000 jobs, following May’s 272,000 job increase.
It is worth noting that the ADP report and the nonfarm payrolls count from the Bureau of Labor Statistics have shown discrepancies in the past, with ADP tending to underestimate the job numbers. In May, the BLS reported a private sector job increase of 229,000, which was 72,000 more than ADP’s estimate.
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