ADP: Labor Market Cooling With 152,000 Jobs Added in May | Economy

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  • The private payroll company says companies added 152,000 jobs in May, lower than expectations for an increase of 175,000 jobs.
  • The services sector continues to be a driver of employment growth, adding 149,000 jobs.
  • The manufacturing sector lost 20,000 jobs.

Private companies added 152,000 jobs in May as the labor market continues to show signs of slowing from the rapid pace of the past two years, payroll company ADP said on Wednesday.

The employment figure came in below expectations for a rise of 175,000 and follows a downwardly revised increase of 188,000 in April. Most of the increase came in the services sector, where 149,000 jobs were added, most of which occurred in the trade, transportation and utilities sectors, as well as in education and health services.

The manufacturing sector saw a decrease of 20,000 jobs. In terms of size, medium and large companies accounted for the bulk of new employees.

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ADP: Labor Market Cooling With 152,000 Jobs Added in May | Economy

“Job gains and wage growth slow in the second half of the year,” said Nella Richardson, chief economist at ADP. “The labor market is strong, but we observe notable pockets of weakness linked to both producers and consumers.”

The Labor Department said Tuesday There were 8.1 million open jobs at the end of April, down from 8.36 million in March. There has been a steady downward trend in open positions since openings peaked at 12 million in March 2022, when the country was recovering amid the COVID-19 pandemic.

“Since the peak in March 2022 when disruption was high as employers scrambled to find workers after mass layoffs and many workers quit in search of better opportunities, employment is now more than 80% of the way back to ‘normal’ (and Jobs said Elise Gould, chief economist at the Economic Policy Institute, said the opening rate is 90% back to normal.

On Friday, the government will release its monthly jobs report for May, with the economy expected to add about 190,000 jobs – up from 175,000 in April.

A continued slowdown in the labor market could give the Federal Reserve some respite as it considers cutting interest rates later this year. After inflation data came in hotter than expected earlier this year, The pace of price increases slowed, Although inflation is still above the Fed’s 2% annual target.

“Evidence is accumulating that the Fed should start easing,” said Ronald Temple, chief market strategist for asset management and financial advisory at Lazard. “The number of vacancies per unemployed worker has fallen from 2.0 to 1.24, and fewer workers are quitting each month, clearly indicating reduced opportunities to earn higher wages by switching jobs.

“Tuesday’s labor report combined with improved inflation data for April should prompt investors to start raising the odds of a Fed rate cut.”

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