WASHINGTON (Reuters) – U.S. private employers added the fewest number of workers in more than two years in May, but the data is probably not a true reflection of the labor market, which is gradually easing amid economic uncertainty over the Trump administration’s tariffs.
Private payrolls increased by only 37,000 jobs last month, the smallest gain since March 2023, after a downwardly revised rise of 60,000 in April, the ADP National Employment Report showed on Wednesday. Economists polled by Reuters had forecast private employment would advance by 110,000 following a previously reported increase of 62,000 in April.
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the more comprehensive employment report for May that is due to be released on Friday by the Labor Department’s Bureau of Labor Statistics. There is no correlation between the ADP and BLS employment reports.
Government data on Tuesday showed there were 1.03 job openings for every unemployed person in April, little changed from March.
“As usual, we suggest ignoring the message from the ADP employment report, mostly because it has had a very poor track record in recent years,” said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
The services sector accounted for nearly all the new jobs last month, with payrolls in that category rising by 36,000. That reflected gains in the financial activities, information as well as leisure and hospitality industries.
Goods producing sector payrolls declined by 2,000, pulled down by job losses in the manufacturing and mining industries.
“Use ADP only to gauge the big picture,” said Carl Weinberg, chief economist at High Frequency Economics. “Right now, that picture shows ADP’s private sector employment estimates declining steadily since December.”
The BLS is expected to report that private payrolls increased by 120,000 jobs in May after advancing by 167,000 in April, a Reuters survey showed. Overall nonfarm payrolls are estimated to have increased by 130,000 jobs after rising by 177,000 in April. The unemployment rate is forecast to be unchanged at 4.2%.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)
Comments