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U.S. private sector employment grows at disappointingly slow pace


Job growth in the U.S. private sector slowed again during the month of June, according to a new report from ADP Research Institute and Moody’s.

The U.S. private sector added a disappointing 102,000 positions in June, lower than the 140,000 positions Wall Street was predicting. May’s figure was revised up to 41,000 from the 27,000 positions that was initially reported. Last month’s reading represented the smallest increase in private positions since the start of the economic expansion.

“Job growth started to show signs of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “While large businesses continue to do well, small businesses are struggling as they compete with the ongoing tight labor market.”

Change in Nonfarm Private Payrolls by Company Size (ADP Research Institute)
Change in Nonfarm Private Payrolls by Company Size (ADP Research Institute)

While larger businesses were adding, small businesses with fewer than 50 employees saw a drop of 23,000 positions. Meanwhile, businesses with 19 or less employees reduced payrolls by 37,000 positions.

The sector that continues to see weakness was the goods-producing sector, with construction falling by 18,000 positions. Within the services-producing sectors, leisure and hospitality added a meager 3,000 positions during June.

“The goods producing sector continues to show weakness. Among services, leisure and hospitality’s weakness could be a reflection of consumer confidence,” Yildirmaz said.

Consumer confidence levels dropped more than expected in June. The Consumer Board’s consumer confidence index fell to a reading of 121.5, which was its lowest level since September 2017.

ADP’s private sector employment report comes amid heightened concerns about a a slowing U.S. economy, as many fear that the deceleration in recent economic data could spread more meaningfully to the labor market.

“The muted 102,000 increase in the ADP’s measure of private payrolls in June, which follows an even weaker 41,000 gain in May, suggests that the deterioration in the broader economy has now spread to the labour market,” Capital Economics wrote in a note Wednesday.

Though the ADP report is not always a reliable indicator of what the Bureau of Labor Statistics (BLS) report will illustrate, it does provide a bit of insight into the health of employment in the U.S.

The BLS will release the June jobs report on Friday. Economists polled by Bloomberg are expecting the U.S. economy to have added 160,000 jobs in June, up from the 75,000 positions added in May.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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