The US private sector added 98,000 jobs in June, according to the latest ADP report released Wednesday, falling short of market expectations across all sources. Economists had forecast job gains ranging from 110,000 to 118,000, making the actual figure a notable miss compared to both the consensus and the previous month's unrevised increase of 122,000 jobs [1][2][3]. Nearly half of June's job creation—48,000 positions—came from the education and health services sector, which continues to lead payroll growth [2][3]. Other sectors contributing to the gains included trade, transportation and utilities (+15,000), financial activities (+14,000), other services (+8,000), information (+7,000), manufacturing (+5,000), and leisure and hospitality, professional and business services, and construction (each +2,000) [2][3]. The only sector to lose jobs was natural resources and mining, which shed 5,000 positions [2][3].
Wage growth remained steady, with annual pay gains for job stayers at 4.4% and for job switchers accelerating to 6.6% [2][3]. The report also highlighted that small businesses (fewer than 50 employees) led job creation with 53,000 new positions, while large companies (500 or more employees) added 25,000 jobs and mid-sized firms contributed 29,000 [3].
Nela Richardson, ADP's chief economist, commented, "The pace of hiring is telling a story of both supply and demand. We know it's taking people longer to find work, but there also are signs of labor supply constraints in certain industries. For now, the overall effect is a slowdown in job creation" [1][2][3].
Market reaction to the report was measured, with the US Dollar Index rising 0.25% to 101.41 following the release, indicating some resilience in the currency despite the weaker-than-expected employment data [1]. The ADP report is often viewed as a precursor to the official nonfarm payrolls report from the Bureau of Labor Statistics, which is scheduled for release the following day. Wall Street consensus expects nonfarm payrolls to rise by 115,000 in June, with the unemployment rate holding steady at 4.3% and average hourly earnings increasing by 0.3% month-over-month and 3.5% year-over-year [3].
Recent months have seen ADP's figures generally undershoot the official government report, which has shown mostly solid job creation this year [3]. The subdued job growth in June, particularly in key consumer-driven sectors like leisure and hospitality, may signal ongoing challenges in the labor market.
CONCLUSION
June's ADP report revealed a significant slowdown in US private sector job growth, with gains falling short of expectations and concentrated in a few sectors. While wage growth remains steady, the overall pace of hiring has decelerated, prompting a cautious market response. Investors are now looking to the upcoming official nonfarm payrolls report for further clarity on the labor market's trajectory.