A bartender prepares drinks at Le Central restaurant on Tuesday, May 7, 2024, in San Francisco, California, USA.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
Private job creation slowed more than expected in May, a report from ADP showed on Wednesday, pointing to a further slump in the labor market.
The payroll processing company said companies added 152,000 jobs this month, down from a downward revision of 188,000 jobs in April and below the Dow Jones consensus estimate of 175,000 jobs. This is the lowest monthly level since February.
Annual wage growth has remained at 5% for three consecutive months as job creation slows.
“Both job growth and wage growth will slow as we enter the second half of the year,” said Nela Richardson, chief economist at ADP. “The labor market is solid, but we are monitoring significant weaknesses related to producers and consumers.”
Nearly all recruitment was in the services sector, with goods producers accounting for just 3,000 net employees.
Trade, transportation and public utilities created 55,000 new jobs, education and medical services created 46,000 new jobs, and construction created 32,000 new jobs. Other services categories increased by 21,000, but leisure and hospitality, a major contributor over the past few years, added only 12,000.
Job losses occurred across multiple industries this month.
Manufacturing has been shrinking for much of the past year and a half, losing 20,000 jobs. Other declining sectors included natural resources and mining (-9,000), information (-7,000) and professional and business services (-6,000). Small businesses also saw a decline, with 36,000 fewer companies employing 20 to 49 people.
The report comes two days ahead of the more closely watched nonfarm payrolls data from the Bureau of Labor Statistics. ADP can sometimes preview future content in BLS reports, although the two counts may differ, sometimes significantly. The ADP report showed private sector employment increased by 188,000 in April, surpassing the Bureau of Labor Statistics’ (BLS) increase of 167,000.
Wall Street economists expect nonfarm payrolls to increase by 190,000 in May after rising by 175,000 the previous month. However, some recent indicators have shown signs of a hiring slowdown, with a Bureau of Labor Statistics report on Tuesday showing job openings fell to just over 8 million in April, the lowest level since February 2021.
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