US private payrolls miss expectations

Private payrolls in the United States grew much less than expected in May, suggesting that labor demand is beginning to slow amid higher interest rates and tighter financial conditions.

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

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

“In a context of a tight labor market and high inflation, monthly job gains are closer to pre-pandemic levels,” Nela Richardson, chief economist at the ADP, said in a statement.

Hiring is starting to catch up across sectors, though Richardson said small businesses are a source of concern as they struggle to keep up with the bigger companies that are booming of late.

The dominant services sector was the biggest source of job gains, with 104,000, while the goods-producing sector only gained 24,000.

The majority of service positions occurred in education and health, with 46,000 positions. The leisure and hospitality sectors, which include bars and restaurants, saw significantly less growth than in April, adding just 17,000.

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