U.S. private payrolls saw an unexpected decline in June, with a loss of 33,000 jobs reported by the ADP National Employment Report. This figure follows a revised increase of only 29,000 jobs in May, which fell significantly short of economists’ expectations. Analysts had anticipated a rise of 95,000 jobs in June, given the earlier estimation of 37,000 for May.
This ADP report was released ahead of the more detailed employment data from the Labor Department, which is due to be published a day early on account of the upcoming Independence Day holiday. It’s noteworthy that there is typically no correlation between the ADP report and the Bureau of Labor Statistics (BLS) employment figures.
Despite the recent downturn in job growth, attributed to ongoing uncertainties in trade policies, widespread layoffs have not yet occurred, which offers some stability to the job market. A report from Challenger, Gray & Christmas indicated a significant drop in job cuts announced by U.S.-based employers, decreasing by 49% to a total of 47,999 in June. Furthermore, planned layoffs in the second quarter saw a remarkable decrease of 50% compared to the first quarter of the year.
However, hiring remains sluggish, with the Job Openings and Labor Turnover Survey (JOLTS) indicating a decline of 112,000 hires in May, bringing the total to 5.503 million. The data revealed that there were 1.07 job openings for every unemployed individual in May, up from 1.03 the previous month.
Andrew Challenger from Challenger, Gray & Christmas pointed out that without a robust economic catalyst, hiring is likely to remain subdued through the rest of the year.
Looking ahead, economists anticipate that the government’s employment report will reflect an increase of 105,000 private payrolls for June, with overall nonfarm payrolls expected to rise by 110,000 jobs. The unemployment rate is also projected to rise slightly to 4.3% from 4.2%.
In this shifting economic landscape, while immediate hiring numbers may be disappointing, the significant decline in planned layoffs suggests some resilience in the job market. This could indicate that businesses are maintaining their workforce in anticipation of more favorable conditions in the future.