By Alice Seeley
The U.S. economy added far fewer jobs in the private sector in May than expected, according to Automatic Data Processing (ADP)’s National Employment Report released on June 2. These findings suggest that the tightest job market in decades has made it difficult for employers to fill open positions.
The report found that private employment increased by only 128,000 jobs from April to May. This is the slowest pace since the COVID lockdown in April 2020 and well below economists’ projections of 300,000 new jobs.
ADP Chief Economist Nela Richardson said the hiring rate has “tempered across all industries.” However, small businesses, in particular, are a “source of concern as they struggle to keep up with larger firms that have been booming as of late.”
In May, large businesses added 122,000 private-sector jobs while small businesses lost 91,000 and medium businesses with 50 to 499 employees added 97,000 jobs in the same month.
According to ADP, the service industry accounted for the most new jobs from April to May, adding 104,000. Those jobs include 23,000 in professional and business services such as accounting and tax preparation, 10,000 in financial activities like banking, and 17,000 in leisure and hospitality. The goods-producing jobs increased by 24,000, including 22,000 in manufacturing and 5,000 in natural resources and mining but lost 2,000 in the construction industry while franchise employment grew by 26,400.
Analyst at Vital Knowledge Media, Adam Crisafulli, called the report “bad for the economy, but good for markets” and said it would likely encourage the Federal Reserve to continue raising interest rates.
