A widely followed indicator of the U.S. labor market showed far more weakness in May than analysts had predicted, prompting a call for lower interest rates from President Donald Trump.
The private sector added just 37,000 workers to payrolls in May, according to payroll processor ADP. This is the lowest pace of hiring since March of 2023.
Economists had forecast 110,000 jobs.
The ADP report no longer is intended to foreshadow the official jobs reports from the U.S. government, which will be released on Friday. ADP says it is an independent assessment of the labor market. For several years, ADP and the Labor Department’s readings have been deeply out of sync.
“After a strong start to the year, hiring is losing momentum,” said Nela Richardson, chief economist for ADP.
President Donald Trump reacted to the numbers almost immediately by calling on the Federal Reserve and chairman Jerome Powell to lower interest rates.
“ADP NUMBER OUT!!! ‘Too Late’ Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!” Trump said on his Truth Social site.
The Fed has kept its interest rate target steady this year despite a significant decline in inflation and growing concerns about economic growth. It cut rates at three consecutive meetings at the end of the Biden administration, including a controversial half point cut several weeks before the election.
Goods-producing sectors shed a total of 2,000 jobs in May, as employment fell by 5,000 in natural resources and mining and 3,000 in manufacturing. These losses were partially offset by a gain of 6,000 jobs in the construction industry.
In the service sector, job growth was led by leisure and hospitality, which added 38,000 positions, and financial activities, which gained 20,000. However, this was counterbalanced by notable declines: professional and business services lost 17,000 jobs, education and health services dropped 13,000, and trade, transportation, and utilities saw a decrease of 4,000.
Small businesses with fewer than 50 employees cut 13,000 jobs, while large firms with 500 or more workers reported a loss of 3,000 positions. In contrast, mid-sized companies expanded payrolls by 49,000.
Wage growth remained strong: workers who stayed in their roles saw annual pay increases of 4.5 percent, while job switchers experienced 7 percent gains. Both figures were largely unchanged from April, and still reflect a “robust” pace, according to Richardson.
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