Private employment in the US grows below expectations in May: ADP

The US private payroll grew much less than expected in May, which would suggest labor demand is beginning to slow amid higher interest rates and tighter financial conditions, though job openings remain extremely high.

Private payrolls increased by 128,000 jobs last month, the ADP National Employment Report showed on Thursday.

April data was revised down to show 202,000 Job positions added instead of the 247,000 initially reported. Economists polled by Reuters had forecast that private payrolls would rise by 300,000 jobs.

The ADP report is developed in conjunction with Moody’s Analytics and it was released ahead of the more comprehensive employment report for May to be released by the Labor Department on Friday. However, it has a poor track record in predicting the private payroll count in the government’s Bureau of Labor Statistics employment report due to differences in methodology.

Government data on Wednesday showed there were 11.4 million job openings on the last day of April, lowering the gap between jobs and workers to 3.3% of the labor force, which is still high, from 3.6% in March. The Federal Reserve is trying to cool down the demand for labor to reduce inflation, without raising the unemployment rate too much.

According to a Reuters survey of economists, private payrolls probably increased by 325,000 jobs in May, after rising by 406,000 in April. With no increase in government employment expected, that would likely result in a 325,000-job jump in nonfarm payrolls.

The economy added 428,000 jobs in April, marking 12 straight months of job gains above 400,000.

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