NEW YORK – US companies added workers at a more moderate pace in June and wage growth cooled, consistent with a gradual cooling in labour demand.
Private payrolls increased 150,000 last month, largely reflecting an increase in job gains within leisure and hospitality, according to the ADP Research Institute. The median estimate in a Bloomberg survey of economists called for a 165,000 increase.
“Job growth has been solid, but not broad-based,” Nela Richardson, chief economist at ADP, said in a statement. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”
ADP’s report adds to signs that the labor market is gradually cooling, with the unemployment rate rising to 4% in May, the highest in over two years. The number of recurring applications for unemployment benefits has also increased, indicating it’s taking longer for out-of-work Americans to find jobs.
Federal Reserve Chair Jerome Powell said Tuesday during a panel at a European Central Bank conference that there’s been a “substantial” move toward balance in the labor market between the supply and demand for workers.
Wage growth slowed for a third month in June for workers who changed jobs to 7.7 per cent from a year ago in the ADP data, published Wednesday in collaboration with Stanford Digital Economy Lab. Workers who stayed in their job saw a 4.9 per cent annual increase, the smallest since mid-2021.
There are scattered signs that companies are paring headcounts due to cost-cutting and softer economic conditions. US-based employers announced 48,786 job cuts in June, according to Challenger, Gray & Christmas Inc. Excluding 2020, the height of the pandemic, that’s the highest number of announcements for any June since 2009.
Fed policymakers will get further insight into the state of the labor market Friday with the release of the monthly employment report. Economists anticipate a 190,000 gain in nonfarm payrolls, which include private- and public-sector jobs, a step-down from the previous month.
ADP bases its findings on payroll data covering more than 25 million US private-sector employees. BLOOMBERG