The recently released ADP National Employment Report in the United States for June showed that private sector employment decreased for the first time in over two years, although the low layoff rate has kept the labor market stable.
According to the ADP report, private sector employment declined by 33,000 in June, marking the first decrease since March 2023. The data for May was also revised downward to an increase of 29,000. Economists surveyed by Reuters had previously predicted that the ADP report would show an increase of 95,000 jobs in June, compared to the previous 37,000 jobs added in May.
The ADP report, jointly compiled by the ADP Research Institute and the Stanford Digital Economy Lab, is not highly regarded for its accuracy in predicting official employment numbers but is used to gauge the overall situation.
The Bureau of Labor Statistics (BLS) will release a more comprehensive June employment report on Thursday. Due to the Independence Day holiday falling on Friday, the BLS report will be published a day early, with no connection between the two reports.
Analysis by Reuters suggests that hiring growth has slowed down as businesses contend with trade policy uncertainties. However, there has not been a significant increase in layoffs, keeping the labor market stable.
Furthermore, another report released by global outplacement firm Challenger, Gray & Christmas revealed that in June, employers in the U.S. announced 47,999 job cuts, a 49% decrease from the previous month.
The total number of planned layoffs for the second quarter was 247,256, a 50% decrease from the first quarter, while planned hirings dropped from 9,683 in May to 3,191 in June.
The Job Openings and Labor Turnover Survey (JOLTS) report released by the government on Tuesday also indicates a sluggish hiring trend. The report shows a decrease of 112,000 in new job additions in May, totaling 5.503 million. In May, there were 1.07 job openings for every unemployed person, up from 1.03 in April.
Senior Vice President of Challenger, Gray & Christmas, Andrew Challenger, pointed out that without strong economic momentum, the hiring outlook for the rest of the year may not be optimistic.
Economists interviewed by Reuters anticipate that the government’s employment report will reveal an increase of 105,000 jobs in the private sector in June, following a gain of 140,000 jobs in May.
Nonfarm employment is expected to add 110,000 jobs, compared to 139,000 in May. The unemployment rate is forecasted to rise from 4.2% in May to 4.3%.
The potential job-boosting effects of the large-scale tax cuts and spending bill under consideration in the U.S. House of Representatives are yet to be seen.
(This article references reporting from Reuters)