Private payrolls grew by just 150,000 in June, less than expected

June Sees Lower-than-Expected Private Payroll Growth

According to a recent ADP report, private payroll growth in June was modest, suggesting a potential slowdown in the U.S. labor market. The report revealed that companies added 150,000 jobs, a slight decrease from the revised 157,000 in May and below the Dow Jones consensus estimate of 160,000. This marks the lowest monthly gain since January.

Leisure and Hospitality Lead to Job Growth

The leisure and hospitality sector played a crucial role in job creation, adding 63,000 positions—the highest among all categories tracked by ADP. The overall job growth would have been significantly lower without this sector’s surge.

Other Sectors Showing Gains

• Construction: Added 27,000 jobs
• Professional and Business Services: Added 25,000 jobs
• Other Services: Added 16,000 jobs
• Trade, Transportation, and Utilities: Added 15,000 jobs

Sectors with Declines

• Natural Resources and Mining: Lost 8,000 jobs
• Manufacturing: Lost 5,000 jobs
• Information: Lost 3,000 jobs

Economic Insights from ADP’s Chief Economist

“Job growth has been solid but not broad-based,” said Nela Richardson, ADP’s chief economist. “Without the rebound in hiring in leisure and hospitality, June would have been a downbeat month.”

Wage Growth Trends Downward

Wage gains for those staying in their jobs slowed to a 4.9% year-over-year increase, the smallest rise since August 2021. Job switchers saw a 7.7% increase, though this number is also trending downward.

Employment by Company Size and Region

Mid-sized companies (50-499 employees) led job creation, adding 88,000 positions in June. Small businesses contributed just 5,000 jobs. Geographically, the South accounted for 80,000 jobs, over half of the total.

Looking Ahead: Nonfarm Payrolls Report

ADP’s report is a precursor to the Labor Department’s nonfarm payrolls report, which is expected to show an additional 200,000 jobs for June, following May’s 272,000. Historically, ADP’s figures often differ from the Bureau of Labor Statistics (BLS) counts. For instance, in May, the BLS reported a private payroll increase of 229,000, 72,000 more than ADP’s estimate.

Stay tuned for the Labor Department’s upcoming nonfarm payrolls report for a more comprehensive view of the U.S. job market.