ADP Private Sector Jobs Increase by 37,000 in May
Lowest Since May 2023
Trump Says, "Too Late Powell... Europe Has Cut Nine Times"
Last month, private sector job growth in the United States slowed sharply. The increase in employment was the smallest in nearly two years, heightening concerns about an economic downturn. President Donald Trump renewed his pressure on Federal Reserve Chair Jerome Powell to immediately cut interest rates.
According to the U.S. employment report released by private labor market research firm ADP on June 4 (local time), the number of new private sector jobs added in May was 37,000. This is the lowest figure in two years, since May 2023. It fell far short of the market expectation of 111,000, and the increase was also significantly smaller compared to April, when 60,000 new private jobs were created.
By sector, professional and business services saw a decrease of 17,000 jobs. Education and health services declined by 13,000. The natural resources and mining sector lost 5,000 jobs, while trade, transportation, and utilities and manufacturing decreased by 4,000 and 3,000 jobs, respectively.
The wage growth rate remained robust, with annual wages rising by 4.5% for workers who stayed at their jobs for a year and by 7% for job changers. This is similar to the level recorded in April.
President Trump immediately called on Chair Powell to cut interest rates again as soon as the data was released. On his self-created social networking service, Truth Social, he wrote, "The ADP numbers are out," and added, "Too Late Powell must lower rates right now." He continued, "He is truly unbelievable," and noted, "Europe has cut rates nine times."
President Trump is publicly demanding a rate cut from Chair Powell as concerns about a recession grow due to his aggressive tariff policies. At their first meeting at the White House on May 29, following the start of his second term, Trump also pointed out that not lowering rates would be a mistake and would put the United States at an economic disadvantage. However, since President Trump took office, Chair Powell has held the benchmark interest rate steady at three consecutive Federal Open Market Committee (FOMC) meetings.
Employment indicators are showing mixed signals. In the Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor the previous day, labor market demand was found to remain solid. According to JOLTs, the number of job openings in April this year was 7,391,000, an increase of 191,000 from the previous month (7,200,000). This also far exceeded the market forecast of 7,110,000.
A more accurate employment indicator reflecting the state of the labor market will be released on June 6. In the May employment report to be published by the Department of Labor on June 6, nonfarm payrolls are expected to have increased by 125,000 last month. This would be below the April figure of 177,000, indicating a slight slowdown in labor demand, but the labor market is still expected to remain healthy. The unemployment rate is projected to remain at 4.2%, the same as the previous month. The nonfarm payrolls report released by the Department of Labor, which includes both private and public sector employment, is considered the most reliable indicator of the overall health of the labor market.
With President Trump's tariff policies leading to a slowdown in consumer spending and visible signs of businesses hesitating to hire, Wall Street is paying close attention to employment data. The Fed currently assesses that the labor market is generally balanced, but is closely monitoring the possibility of a weakening trend in the coming months.
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