The U.S. private sector lost 33,000 jobs in June, according to new data from payroll-processing firm ADP, marking a sharp reversal from expectations of continued employment growth and raising fresh concerns about the labor market’s trajectory.
Economists surveyed by Econoday had forecast a gain of 103,000 jobs for the month. Instead, the report released Wednesday morning showed the first monthly decline in private-sector employment since January 2021.
Manufacturing, which had been a weak spot in the labor market, added a solid 15,000 jobs. Construction added 9,000 jobs. Natural resources and mining, which includes oil and natural gas extraction, added 8,000 jobs.
The services side of the economy lost 66,000 jobs. Professional and business services shed 56,000. Education and health services payrolls shrank by 52,000. Financial activities contracted by 14,000.
There were gains elsewhere in services. Leisure and hospitality added 32,000. Information added 5,000. Trade, transportation and utilities added 14,000.
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” said Dr. Nela Richardson, chief economist, ADP. “Still, the slowdown in hiring has yet to disrupt pay growth.”
Small businesses were particularly hard-hit, with firms with fewer than 50 employees shedding an aggregate of 47,000 jobs. Those between 50 and 250 employees shrank by 15,000. Larger firms added 30,000.
Despite the downturn in hiring, wage growth remained steady. Annual pay rose 4.4 percent year-over-year in June, holding the same pace as in May. Pay gains were strongest in leisure and hospitality, up 4.9 percent, while manufacturing and professional services showed more moderate increases.
The report arrives one day ahead of the government’s official employment report, which includes both public and private payrolls. The ADP figures are often viewed as a preview of broader labor market trends but the company says its report is no longer designed to anticipate the official figures. Intead, it is intended as an independent measure of the labor market and demand for workers. Even prior to post-pandemic changes, the ADP often diverged sharply from the Labor Department’s data.
Economists expect the June employment report, set to be released Thursday, will show employers added 115,000 workers in June, down from 139,000 in May. Private sector employers are forecast to have added 100,000.
An unexpected contraction in employment could put pressure on the Fed to cut interest rates as soon as its July meeting. President Donald Trump has been calling on the Fed to cut interest rates for months, sharply criticizing chairman Jerome Powell, who he has nicknamed “Too Late.”
Markets responded cautiously to the release, with investors weighing whether the weaker jobs data could influence the Federal Reserve’s rate policy. While inflation has cooled in recent months, Fed officials have emphasized the importance of a stable labor market in setting the path for future interest rate decisions.
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