Private Sector Sheds 33,000 Jobs in June, ADP Report Shows

New York: Private sector employment unexpectedly declined in June, with U.S. companies shedding 33,000 jobs, according to data released Wednesday by payroll processing firm ADP. The report marks the first monthly job loss since March 2023 and raises fresh concerns over the strength of the labor market heading into the second half of the year.

Economists surveyed by Dow Jones had forecast a gain of 100,000 jobs, making the results a sharp miss. May's job growth was also revised lower—from 37,000 to 29,000.

“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” said Nela Richardson, Chief Economist at ADP.

Services Sector Leads Decline

The job cuts were concentrated in service-providing sectors, especially:

• Professional and business services: −56,000

• Health care and education: −52,000

• Financial activities: −14,000

Meanwhile, goods-producing sectors such as manufacturing and mining added 32,000 jobs, offsetting part of the broader decline.

Overall, service industries lost 66,000 positions, signaling potential trouble ahead for white-collar employment as businesses slow expansion plans.

Regional and Business Size Breakdown

Job losses were uneven across regions:

• Midwest: −24,000

• West: −20,000

• Northeast: −3,000

• South: +13,000 (only region to post gains)

Company size also played a major role:

• Large firms (500+ employees): +30,000 jobs

• Small firms (<20 employees): −29,000 jobs

The data suggests that smaller businesses are struggling more than larger employers in the current environment, potentially due to tighter credit conditions and rising wage pressures.

Wages Show Modest Slowdown

ADP also reported that annual pay growth softened in June:

• Job stayers: +4.4% (down from 4.5% in May)

• Job changers: +6.8% (down from 7%)

The easing in wage growth may help alleviate inflation concerns but also reflects growing caution in hiring and compensation strategies.

Markets Eye BLS Data Amid Fed Uncertainty

The weak ADP report could influence expectations for the official nonfarm payrolls data, set to be released Thursday by the Bureau of Labor Statistics (BLS). Economists expect a gain of 110,000 jobs and a rise in the unemployment rate to 4.3%.

However, ADP’s private payrolls report has historically diverged from the BLS data, and traders remain cautious in drawing firm conclusions until the government figures are out.

The S&P 500, which recently recovered from a tariff-induced selloff, was largely unchanged after the release, buoyed by broader optimism. Markets are closed Friday for Independence Day and will operate a shortened session on Thursday.