Private job creation slowed more than expected in May, signaling further weakness in the labor market, according to a report released Wednesday by ADP.
The payroll company said companies added 152,000 jobs this month, lower than April’s downwardly revised 188,000 and below the Dow Jones consensus forecast of 175,000, which was the lowest monthly level since January.
Annual wage growth remained at 5% for the third consecutive month as job creation slowed.
“Job gains and wage growth are slowing as we move into the second half of the year,” said Nella Richardson, ADP’s chief economist. “While the labor market remains strong, we are monitoring notable weaknesses related to both producers and consumers.”
A bartender prepares drinks at Le Central restaurant on Tuesday, May 7, 2024 in San Francisco, California, USA.
David Paul Morris | Bloomberg | Getty Images
Nearly all of the employment came from the service sector, with goods-producer employment adding just 3,000 to the total.
Trade, transport and public works added 55,000 new jobs, education and health services added 46,000 and construction added 32,000. Other services added 21,000, while leisure and hospitality, the main contributor in previous years, added just 12,000.
Employment fell in many sectors during the month.
Manufacturing, which had been shrinking for much of the past year and a half, lost 20,000 jobs. Other job losses included natural resources and mining (-9,000), information (-7,000), and professional and business services (-6,000). Small businesses also declined, with businesses employing 20 to 49 employees losing 36,000 jobs.
The report comes two days before the Bureau of Labor Statistics releases its nonfarm payrolls. While ADP can sometimes use the BLS report to predict future trends, the two numbers can sometimes differ widely. ADP reported that private payrolls rose 188,000 in April, beating the BLS’s 167,000 increase.
Wall Street economists expect nonfarm payrolls to rise by 190,000 in May, following a gain of 175,000 the previous month. But a number of recent indicators have shown signs of slowing hiring, with the BLS reporting on Tuesday that job openings fell to just over 8 million in April, the lowest level since February 2021.
Correction: The May ADP reading was the lowest monthly level since January. An earlier version contained an error of one month.
