U.S. companies are experiencing a significant slowdown in hiring, reaching the slowest pace in two years. Sectors such as business services, education, and healthcare are cutting jobs, highlighting a weakening demand for employment. According to ADP Research, the private sector added only 37,000 jobs last month, falling short of all economists' expectations surveyed by Bloomberg. This marks the second consecutive month of underperformance against forecasts.
ADP's Chief Economist, Nela Richardson, noted that the hiring momentum is waning after a strong start to the year. The data suggests that anxiety over shifting economic policies under President Donald Trump has negatively impacted hiring decisions, leading to prolonged job searches for the unemployed. Economists anticipate further cooling signs in the labor market in the coming months.
In May, sectors such as trade, transportation, and manufacturing saw job losses, whereas leisure, hospitality, and financial activities experienced hiring increases. The Northeast region faced the most significant job cuts, with both small and large businesses reducing employment numbers. Following the ADP report, Trump reiterated on social media that Federal Reserve Chairman Jerome Powell should consider cutting interest rates.
Despite the hiring slowdown, wage growth remains robust. Workers changing jobs saw a 7% increase in wages, while those staying in their current positions experienced a 4.5% rise. The ADP report, in collaboration with Stanford's Digital Economy Lab, is based on data covering over 25 million U.S. private-sector employees. The U.S. government is set to release the May non-farm employment report, expected to show a slowdown in job growth compared to April, with the unemployment rate remaining stable.
