Companies added slightly fewer employees in June than expected, with hiring focused on healthcare-related sectors, ADP reported Wednesday.
Private sector payrolls increased by a seasonally adjusted 98,000 jobs in the month, down from an unrevised 122,000 in May and slightly below the Dow Jones consensus estimate of 110,000, the payroll firm reported.
The ADP report serves as a precursor to the more widely watched nonfarm payrolls release from the Bureau of Labor Statistics on Thursday. ADP tallies in recent months have generally been lower than official government reports showing job creation has been mostly steady this year.
Almost half of June’s growth (48,000 jobs) came from the education and health services sector, which has consistently led employment growth. All but 2,000 of the new jobs were in the service industry.
Other sectors that recorded increases include trade, transport and public works (15,000 jobs), financial activities (14,000 jobs) and other services (8,000 jobs). Natural resources and mining lost 5,000 jobs, making it the only sector in the red. The number of leisure and hospitality jobs rose by just 2,000, continuing a weak year for an industry seen as an indicator of underlying consumer demand.
“The pace of hiring speaks to both demand and supply. We know people are taking longer to find jobs, but there are also signs of labor supply constraints in some industries,” said Nella Richardson, chief economist at ADP. “Right now, the overall effect is a slowdown in job creation.”
Annual salary increases for incumbents remained flat at 4.4%, while annual salary increases for job changers rose to 6.6%.
Employment growth was concentrated in small and medium-sized enterprises. Businesses with fewer than 50 employees increased by 53,000 people, companies with 500 or more employees increased by 25,000 people, and companies in between increased by 29,000 people.
The Wall Street consensus is for U.S. nonfarm payrolls to increase by 115,000 jobs in June and the unemployment rate to hold steady at 4.3%. The average hourly wage is expected to increase by 0.3% per month and 3.5% per year.
