ADP Data Shows June Private Sector Job Growth Fell Short of Forecasts

Private sector hiring in June came in slightly below projections, with significant gains concentrated in healthcare and related fields, according to a Wednesday report.

The payroll processing firm reported that private employment increased by a seasonally adjusted 98,000 positions for the month. This figure is lower than the unrevised 122,000 jobs added in May and modestly under the Dow Jones consensus estimate of 110,000.

This data release acts as a leading indicator for the more closely monitored nonfarm payrolls report from the Bureau of Labor Statistics, scheduled for Thursday. In recent months, ADP's figures have typically been lower than the official government data, which has indicated robust job growth this year.

Close to half of June's employment increase, amounting to 48,000 jobs, originated from the education and health services sector, which has been a persistent driver of payroll expansion. Service-providing industries accounted for all but 2,000 of the new jobs created.

Additional sectors that saw increases included trade, transportation, and utilities with 15,000 jobs, financial activities with 14,000, and other services with 8,000. Natural resources and mining was the only sector to report a decline, shedding 5,000 positions. Leisure and hospitality added a mere 2,000 jobs, continuing a sluggish trend for an industry often viewed as a gauge of consumer demand.

“The current hiring pace reflects dynamics on both the supply and demand sides. While it is taking individuals longer to secure employment, there are also indications of constrained labor availability in specific sectors,” stated the chief economist at ADP. “For the time being, the net result is a deceleration in job growth.”

Annual wage growth for employees who remained in their positions held constant at 4.4%. In contrast, pay increases for those changing jobs ticked higher to 6.6%.

Job gains were predominantly driven by smaller businesses. Firms with fewer than 50 employees contributed 53,000 jobs, while companies with 500 or more employees added 25,000. Midsize firms accounted for an increase of 29,000 positions.

Market expectations are for the official payrolls report to show an addition of 115,000 jobs in June, with the unemployment rate anticipated to remain unchanged at 4.3%. Average hourly earnings are forecast to rise by 0.3% for the month and 3.5% on an annual basis.