Biden Economy Government Jobs Politics

ADP Shock: Job Growth Plummets, Economy in Trouble!

In a sign that hiring may be slowing down, U.S. businesses added just 152,000 new jobs in May, marking the smallest increase this year, according to payroll giant ADP. This figure falls short of economists’ forecast of 175,000, indicating potential concerns about the strength of the labor market.

ADP’s chief economist, Nela Richardson, noted that “Job gains and pay growth are slowing going into the second half of the year.” While she acknowledged that the labor market remains solid, she also highlighted “notable pockets of weakness tied to both producers and consumers.” This suggests that while some areas of the economy are holding steady, there are signs of trouble that could impact future growth.

The majority of new jobs came from health care and education, sectors less reliant on broader economic trends and often referred to as “government-adjacent” sectors. Despite these gains, it’s important to recognize that these sectors’ stability doesn’t necessarily reflect the overall health of the economy.

There was notable strength in trade and shipping and construction, two sectors that are often seen as indicators of broader economic trends. Trade, transportation, and utilities added 55,000 jobs, while construction added 32,000. Financial services also showed positive growth, adding 28,000 jobs in May. However, sectors such as information, manufacturing, professional services, and mining all shed jobs, highlighting a mixed bag in the job market.

Revised figures showed that job gains in April were slightly reduced to 188,000. ADP reported that workers who stayed in their jobs received a 5 percent pay increase over the past year, unchanged for three months. Meanwhile, job switchers saw a 7.8 percent pay bump, although this figure has been falling and is expected to continue its decline. This trend suggests that while there are still opportunities for those willing to change jobs, the benefits of doing so are decreasing.

The ADP report tracks only private-sector hiring and is not intended to predict the official jobs report due out on Friday. Instead, ADP says it is an independent measure of the labor market. Economists expect the Labor Department to report that the economy added 195,000 jobs in May, an increase from April’s 175,000. In a separate report, the Labor Department noted that job openings fell to 8.1 million, missing expectations and marking a sharp decline from the previous month’s 8.4 million. This decline in job openings could be another sign of a cooling labor market as businesses become more cautious in their hiring practices.

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