ADP Weak 2nd Straight Month: +37K, but Wages Stable
Wednesday, June 4, 2025The big report out before the opening bell this morning continues 'Jobs Week' to start a new month: private-sector payrolls from Automatic Data Processing ADP for the month of May. It came out weak for the second straight month: +37K new private-sector jobs created, only a third of the +110K projected. This followed the downwardly revised +60K ADP headline the previous month.This is the lowest tally of new private-sector jobs since the -53K reported back in March 2023, but also looks to be settling at a lower level than would recover the amount of new retirees in the labor market. The past four months now average only +82K new jobs filled, compared to a +197K average over the previous four months — less than half.Goods-producing jobs posted a negative -2K, which is not surprising when we note the 'shedding of jobs in the goods sector,' as quoted by ADP Chief Economist Nela Richardson on CNBC this morning. Services brought in a still-paltry +36K per month. Non-farm payroll estimates for Friday's U.S. Employment Report are still up at +125K.Leisure & Hospitality came out with +38K private-sector job gains, followed by Financial Services at +20K and Construction at +6K. But we also saw a negative -13K from the normally reliable Education & Health Services, and -27K in Professional/Business Services, such as enterprise consulting. Trade/Transportation/Utilities lost -4K private-sector jobs in May.Medium-sized companies (between 50-499 employees) led the way with gains of +49K last month, but large firms dropped -3K jobs in the private sector and small businesses slid -13K. Back to Richardson: '[Companies with] sub-250 employees make up 70% of overall U.S. employment.' So the fall in small-sized company hiring, at least in this ADP report, has added weight to the overall labor market.ADP's unique print within this data compares employees who stay on at their current jobs ('Job Stayers') with those who leave for other employment ('Job Changers'). Stayers in May stood to make +4.5% more year over year, where Changers reached +7.0%. While lower than levels we saw back in the Great Reopening, these are still at generally healthy levels.Thus, Richardson concludes that today's job market, based on private-sector ADP, is 'not collapsing [but] hesitant.' She noted that 'wages are stabilizing at a pretty robust level.' On the other hand, 'There are no super-heroes in this market,' meaning there are no reliable industries to pull private-sector hiring to strong levels, the way Leisure & Hospitality did after the Covid pandemic. But 'layoffs are not imminent,' she said.Pre-market indexes slipped from politely in the green ahead of the ADP report to into the red directly after. Currently, the Dow is -44 points, the S&P 500 is -4 and the Nasdaq -20. The small-cap Russell 2000 is down -2 points at this hour. Indexes are slightly negative over the past five trading days, but all up single-digits in the past month. Year to date, the Dow is -0.7% and the S&P is +0.7%. The Nasdaq is +2.2% but the Russell is -6.5%.More economic figures await us after the bell today, with S&P final Services PMI for May are expected to remain at +52.3, and ISM Services anticipated to tick up half a point from the initial print to +52.1%. Also, a new Fed Beige Book comes out early this afternoon, which will track economic progress among each of the Fed's 12 districts.Questions or comments about this article and/or author? Click here>>
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