Private sector hiring came in below forecasts last month, with companies adding just 98,000 jobs in June, according to ADP’s latest payrolls report.
The figure represents a decline from the 122,000 jobs added in May and fell short of the Dow Jones consensus estimate of 110,000 positions for the month.
Nearly half of all new jobs created in June came from the education and health services sector, which contributed 48,000 positions and continued its role as a dominant driver of payroll growth.
Services sectors accounted for virtually all hiring activity, with all but 2,000 of the new jobs coming from service-related industries across the economy.
Other sectors posting gains included trade, transportation and utilities at 15,000, financial activities at 14,000, and other services at 8,000 new positions.
Natural resources and mining was the only sector to shed jobs, losing 5,000 positions during the month, while leisure and hospitality added a meager 2,000 roles.
The weak showing in leisure and hospitality is notable because the industry is widely viewed as a barometer of underlying consumer demand and broader economic confidence.
“The pace of hiring is telling a story of both supply and demand. We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries,” said Nela Richardson, ADP’s chief economist. “For now, the overall effect is a slowdown in job creation.”
Annual pay gains for workers staying in their current jobs held steady at 4.4%, while job switchers saw their wage growth edge higher to 6.6%.
Small businesses led hiring activity, with establishments employing fewer than 50 workers adding 53,000 jobs, compared to 25,000 at large companies and 29,000 at mid-sized firms.
The ADP report is closely watched as a precursor to the Bureau of Labor Statistics nonfarm payrolls release, though ADP’s count has generally undershot the official government figure in recent months.
Wall Street is forecasting nonfarm payrolls to rise by 115,000 for June, with the unemployment rate expected to hold steady at 4.3% and average hourly earnings projected to climb 0.3% monthly and 3.5% annually.
