Economists had expected a gain of 100K jobs.
The private sector lost 33,000 jobs in June, according to the ADP National Employment Report. It marks the first time since March of 2023 that there has been a monthly decline in jobs.
It also badly missed estimates, as economists had expected the private sector to gain 100,000 jobs in June.
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” Nela Richardson, chief economist at ADP, said. “Still, the slowdown in hiring has yet to disrupt pay growth.”
Service industries took the brunt of the losses, losing 66,000 jobs last month. Professional/business services lost 56,000 jobs, while education/health services dropped 52,000 and financial activities shed 14,000.
That was offset somewhat by 32,000 new jobs in leisure/hospitality, 14,000 in trade/transportation/utilities, and 5,000 in information.
Goods producing industries fared better, adding 32,000 jobs in June. About 15,000 of them were in manufacturing while construction added 9,000 and natural resources/mining produced 8,000 jobs.
Midwest, small businesses, see most job losses
The Midwest was hit the hardest, as the region lost 24,000 jobs, followed by the West, which dropped 20,000. The Northeast only lost 3,000 jobs while the South added 13,000.
Also, small companies were hammered with 47,000 job losses last month, while mid-sized companies shed 15,000 jobs. Only large companies were adding jobs, with 30,000 added in June.
Pay remains solid, rising 4.4% in June, down slightly from 4.5% in May. Job changers saw their pay increase 6.8%, down from 7% in May.
Financial activities, up 5.2%, and leisure and hospitality, up 4.7%, saw the biggest pay increases. Information, at 4.1%, and trade/transportation/utilities, at 4.2% saw the smallest. The rest were right around the average.
Pay raises at small companies, those under 20 employees, were just 2.7%. But on the other end of the spectrum, pay increases at large companies rose 4.8%.
The June results were the continuation of a hiring slowdown in the private sector over the last few months. In April, only 67,000 jobs were created, below estimates. In May, the revised numbers show just 29,000 jobs added, down from 32,000 – short of expectations.
The subpar jobs report did raise expectations for the FOMC to cut rates in July though. According to CME FedWatch, 25.3% of interest rate traders now expect a 25-point cut in July, up from 20.7% just yesterday.
