The U.S. private sector employment decreased by 33,000 positions during June because businesses reduced their hiring activities due to economic instability and trade-related challenges. The ADP National Employment Report showed an unexpected decline in employment numbers after May’s minimal increase of 29,000 jobs.
The professional and business services sector together with education and finance experienced job reductions which caused the overall employment decline. The economy maintained its hiring pace in manufacturing as well as construction and leisure and hospitality sectors. The expected job gain of 95,000 according to economists did not materialize in the report which presented a more cautious outlook before the Labor Department releases its official June employment figures on Thursday.
The ADP report which the Stanford Digital Economy Lab developed functions as a preliminary indicator for private sector employment but its ability to predict government payroll data remains inconsistent. Most economists ignored this report because of its known volatility.
The decline in employment numbers might create doubts about labor market strength because of rising tariffs and higher borrowing costs. High Frequency Economics’ Carl Weinberg advises using ADP data only to understand general employment trends. The labor market stands as a vital consideration for Federal Reserve officials who determine their future interest rate decisions.
