Washington (AFP) – Private sector employment cooled unexpectedly in June, payroll firm ADP said Wednesday, with job creation slowing for a third month.
Job gains came in at 150,000, below the Briefing.com consensus estimate of 163,000 and down from May’s revised 157,000 figure, said the report.
Policymakers have been looking to a cooler labor market — alongside lower inflation — as they mull the right time to begin interest rate cuts.
The current trend, if it persists, could fuel optimism that the first rate reductions may start sooner rather than later — after the Federal Reserve held rates at the highest level in more than two decades in recent months.
Besides ADP’s report, government figures released Wednesday also showed that jobless claims rose to 238,000 in the week ending June 29.
Meanwhile, the four-week average in jobless claims rose to its highest since end-August, according to Pantheon Macroeconomics.
This week, markets are also eyeing the latest government jobs report due Friday, for broader trends in the world’s biggest economy.
Of ADP’s numbers, chief economist Nela Richardson said: “Job growth has been solid, but not broad-based.”
But she added that without a hiring rebound in leisure and hospitality, “June would have been a downbeat month.”
Most of the jobs added were in service industries, with roles in leisure and hospitality bouncing the most by 63,000.
Other segments like professional and business services added 25,000 jobs.
The overall goods-producing sectors added 14,000 jobs, with losses in natural resources and mining, as well as in manufacturing, offset by an increase in construction.
“The data are pointing to ongoing positive private sector job growth, at a steady pace so far this year,” said Rubeela Farooqi, chief US economist at High Frequency Economics, in a note.
She said she expects job growth to remain positive while unemployment stays low, which “should be supportive of economic activity this year.”
Meanwhile, wage gains for workers who stayed in their jobs came in at 4.9 percent last month, the slowest growth rate since August 2021, said ADP.
For staff who changed roles, pay gains eased to 7.7 percent, the report said.
A healthy labor market would allow the Fed to be patient before cutting rates, said Oxford Economics, adding that it expects the first reduction to come in September.
© 2024 AFP
