Private sector employment fell sharply in June, with payrolls contracting by 33,000 jobs, according to data released Wednesday by ADP. The decline marks the first monthly drop in private hiring since March 2023 and contrasts sharply with economists’ expectations for a gain of 100,000 positions.
The losses were concentrated in service industries. Professional and business services shed 56,000 jobs, while health and education roles declined by 52,000. Financial activity also contributed to the downturn, losing 14,000 positions overall.
The setback was partially offset by growth in goods-producing sectors such as manufacturing and mining, which together added 32,000 jobs. Still, the net decline in service-related employment drove the overall contraction.
Regionally, the Midwest and West recorded the largest drops, losing 24,000 and 20,000 jobs, respectively. The Northeast shed 3,000 positions, while the South stood out as the only region to post job gains, adding 13,000.
Smaller businesses struggled more than larger firms. Companies with fewer than 20 employees accounted for 29,000 lost jobs, while the largest employers—those with over 500 workers—added 30,000 positions.
The disappointing report comes amid broader questions about the resilience of the labor market. May’s private payroll gains were also revised downward, from 37,000 to just 29,000. While layoffs remain relatively uncommon, ADP cited growing caution among employers, who are reluctant to hire or replace departing workers.
Wage growth also cooled slightly in June. Pay increases for workers staying in their jobs slipped to 4.4% from 4.5% in May, while job changers saw gains ease to 6.8% from 7%.
Investors are awaiting Thursday’s government jobs report, which is expected to show an increase of 110,000 nonfarm payrolls and a slight uptick in unemployment to 4.3%.
Source: CNBC