The US private sector lost 33,000 jobs in June, marking the first monthly decline since March 2023, according to new data released Wednesday by payrolls firm ADP. The drop sharply contrasts with economists’ expectations of a 100,000-job gain and adds to signs of a softening labour market.
Despite investor optimism that drove the S&P 500 to record highs at the end of June, the ADP report paints a more cautious picture. The previous month’s job growth was also revised downward to 29,000 from 37,000. “While layoffs remain rare, employers appear hesitant to hire or replace departing workers, leading to job losses last month,” said Nela Richardson, ADP’s chief economist.
The services sector bore the brunt of the downturn. Professional and business services lost 56,000 jobs, while health and education saw a decline of 52,000. Financial activities also shed 14,000 roles. On the other hand, goods-producing industries added 32,000 jobs, partially offsetting the broader contraction. Regionally, the Midwest and Western US experienced the steepest losses, down 24,000 and 20,000 jobs respectively. The South was the only region to post gains, adding 13,000 jobs.
Small businesses were hardest hit. Firms with fewer than 20 employees cut 29,000 jobs, while large employers with over 500 workers added 30,000 positions. Wage growth continued to moderate. Annual pay gains for job stayers slowed to 4.4% in June, down from 4.5% in May. For job changers, pay increases eased to 6.8%, compared to 7% the previous month.
While ADP’s report often differs from official government data, it raises concerns ahead of the US Labor Department’s nonfarm payrolls report due Thursday. Economists expect that report to show a 110,000-job gain and a slight uptick in the unemployment rate to 4.3%.