Private sector job growth cools in May to 152,000, worse than expected: ADP

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Hiring by U.S. companies slowed more than expected in May, pointing to a labor market that is continuing to cool in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.

Companies added 152,000 jobs last month, below both the 175,000 increase predicted by LSEG economists and the downwardly revised April gain of 188,000. It marked the worst month for job creation since January.

At the same time, the report showed that wage growth — a key driver of inflation — held steady at 5%, where it has been for three straight months. For workers who changed jobs, wages climbed 7.8%, a steep drop from the 9.3% boost recorded in April.

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Job growth was almost entirely concentrated in the services sector, with goods producers contributing just 3,000 jobs to the total. (Paul Bersebach/MediaNews Group/Orange County Register via / Getty Images)

«Job gains and pay growth are slowing going into the second half of the year,» said Nela Richardson, ADP chief economist. «The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers.» 

Job growth was almost entirely concentrated in the services sector, with goods producers contributing just 3,000 jobs to the total.

Trade, transportation and utilities led the way with 55,000 new jobs, followed by education and health services with 46,000 and construction with 32,000. Leisure and hospitality, once a leading source of job creation, saw payrolls rise by just 12,000 last month. 

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