A cooling signal emerged from the U.S. labor market on Monday. According to the ADP National Employment Report, private sector employment rose by only 98,000 in June, well below both May's 122,000 and the 110,000 consensus estimate from Dow Jones economists. Nearly all new positions came from the healthcare and education services sector, pointing to a clear slowdown in overall hiring.
Healthcare and Education Lead; Small Businesses Drive Growth
The ADP report highlighted striking sector imbalances. Almost all gains occurred in the services industry, with nearly half concentrated in a single category: education and health services added 48,000 jobs. Leisure and hospitality added just 2,000, reflecting consumers pulling back on discretionary spending amid inflation. Natural resources and mining was the only sector to lose jobs, down 5,000.
By company size, small businesses (fewer than 50 employees) contributed the most — an increase of 53,000 jobs, far outpacing medium (29,000) and large firms (25,000). Small and micro enterprises remain the primary hiring engine.
Job Changers See Pay Growth Jump to 6.6%
ADP Chief Economist Nela Richardson commented: "Hiring now reflects both sides of the labor market — supply and demand. People are spending more time job searching, while certain industries face labor supply constraints. The combined effect is slower job creation."
Despite the cooling headline, wage inflation pressures persist. "Stayers" who remained with their current employer saw annual pay growth hold steady at 4.4%, while "job changers" recorded a jump to 6.6% — indicating that firms are still competing aggressively for scarce talent in specific fields.
All Eyes on Official NFP Data Tomorrow
ADP data often serves as a precursor to the Bureau of Labor Statistics' official Nonfarm Payrolls (NFP) report, due Wednesday. The consensus forecast calls for 115,000 new jobs in June, with the unemployment rate steady at 4.3% and average hourly earnings rising 3.5% year-over-year. If the official data aligns with the ADP signal, the case for a Fed rate cut in the second half of the year would strengthen considerably.