Private sector job growth unexpectedly surges by 497,000 in June, ADP says
US companies added 497,000 jobs in June, keeping pressure on the Fed
Labor shortage resulting in higher paying summer jobs
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Hiring by U.S. companies surged more than expected in June, pointing to a labor market that remains tight even in the face of higher interest rates, according to the ADP National Employment Report released Thursday morning.
Companies added 497,000 jobs last month, more than double the 228,000 gain that economists surveyed by Refinitiv predicted. That is also higher than the downwardly revised 267,000 increase recorded in May. It marked the largest one-month gain in more than a year.
The surprise jump in payrolls comes despite an aggressive interest rate hike campaign by the Federal Reserve that spanned 15 months.
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Construction workers on a job site on May 5, 2023, in Miami. ((Photo by Joe Raedle/Getty Images) / Getty Images)
In a potentially welcoming sign for the Fed as it tries to wrangle stubborn inflation under control, wages continued to moderate in June. Annual pay rose 6.4% last month, down from 6.6% in May, according to the report. For workers who switched jobs, wages climbed 11.2%, down almost a full percentage point from the previous month.
"Consumer-facing service industries had a strong June, aligning to push job creation higher than expected," said ADP chief economist Nela Richardson. "But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge."
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The distribution of job gains was concentrated in the service-providing sector, with the majority stemming from the leisure and hospitality industry, which added 232,000 new workers, and trade, transportation and utilities, with a gain of 90,000.
A "Now Hiring" sign is seen outside a job fair at a Schneider Electric manufacturing facility in Hopkins, South Carolina, on Jan. 18, 2023. (Micah Green/Bloomberg via Getty Images / Getty Images)
The most significant losses, meanwhile, were concentrated in the manufacturing sector, which saw payrolls tumble by 42,000. The information sector also shed 30,000, while financial activities cut 16,000
By size, medium and small businesses led the way in hiring last month, onboarding 183,000 and 299,000 workers, respectively. That is a reversal from prior months, in which small businesses struggled to find and retain workers. Large businesses lost 8,000 workers last month.
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The data precedes the release of the more closely watched June jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 225,000 workers following a gain of 339,000 in May. The unemployment rate is expected to inch lower to 3.6%.