Private payrolls rose by 98,000 in June, less than expected, ADP reports

In June, companies added slightly fewer workers than expected, with hiring focused mainly on healthcare-related sectors, according to a report by ADP. Private sector employment grew by 98,000, down from 122,000 in May and below the consensus forecast of 110,000. The ADP report precedes the nonfarm payrolls count from the Bureau of Labor Statistics, which has shown solid job creation this year.

Nearly half of the growth in June, 48,000 jobs, came from the education and health services sector, a consistent leader in job growth. Other sectors that saw gains included trade, transportation, and utilities (15,000), financial activities (14,000), and other services (8,000). However, natural resources and mining lost 5,000 jobs, and leisure and hospitality only added 2,000 positions.

Nela Richardson, ADP’s chief economist, noted that the pace of hiring reflects both supply and demand factors. While it’s taking people longer to find work, there are also signs of labor supply constraints in certain industries, resulting in a slowdown in job creation.

Annual pay gains for employees who stayed in their jobs remained steady at 4.4%, while job switchers saw an increase to 6.6%. Small businesses led in employment gains, with establishments with fewer than 50 employees adding 53,000 jobs. Larger companies also saw gains, with those employing 500 or more adding 25,000 jobs.

Looking ahead, the Wall Street consensus expects U.S. nonfarm payrolls to rise by 115,000 in June, with the unemployment rate remaining at 4.3%. Average hourly earnings are projected to show a monthly increase of 0.3% and an annual increase of 3.5%.

Overall, the job market continues to show signs of growth, albeit at a slightly slower pace in certain sectors. The data from ADP provides valuable insights into the state of the labor market and sets the stage for the upcoming official government report on nonfarm payrolls.