U.S. Private Salaries Decline for the First Time in Over Two Years
In June, private salaries in the U.S. saw their first drop in more than two years, as economic uncertainties impacted employment, albeit still maintaining a tight labor market.
Private payrolls lost 33,000 jobs last month, marking the first decline since March 2023, following a downward revision of 29,000 jobs in May.
Economists had anticipated an increase of 95,000 jobs, considering the previous gain of 37,000 reported for May.
According to ADP data, the sectors that experienced job losses included professional and business services, education and health services, as well as financial activities.
Conversely, the leisure and hospitality, manufacturing, and construction industries added jobs during this period.
The ADP report, created in collaboration with the Stanford Digital Economy Lab, is typically released ahead of a more detailed employment report from the Department of Labor Statistics Bureau. This June release is occurring one day earlier due to the upcoming Independence Day holiday.
Interestingly, there appears to be no direct correlation between the ADP and BLS employment reports.
The BLS employment report is expected tomorrow, and economists have pointed out discrepancies when comparing ADP figures with official payroll statistics.
“We use ADP primarily for a broader view,” noted Carl Weinberg, chief economist at a radio frequency economics firm.
“What’s clear now is that ADP’s estimates for private sector employment have been consistently dropping since December. The significant reduction today really showcases that ongoing trend.”
Job growth seems to be slowing as businesses navigate trade policy uncertainties, yet they aren’t fully depending on a fluid labor market.
Another report from Challenger, Gray & Christmas, revealed that job openings announced by U.S.-based employers totaled 47,999 in June—a dramatic 49% decrease from the previous month.
In the second quarter, planned layoffs reached 247,256, showing a decline of 50% from the first quarter. However, the number of employers planning layoffs fell to 3,191 from 9,683 in May.
This slowdown in hiring is also reflected in the government’s recent employment openings and Labor Turnover survey.
In May, the number of job openings was reported at 553,000, a drop of 112,000, while the ratio of job seekers to open positions rose from 1.03 in April to 1.07 in May.
“Unless there’s a strong financial push, we might continue to see job metrics under pressure for the rest of the year,” suggested Andrew Challenger, senior vice president of Challenger, Gray & Christmas.
Economists predict that private payrolls will have increased by 105,000 in June, with the government’s employment report indicating a rise of 140,000 in May.
Overall non-farm employment is projected to have grown by 110,000, following a gain of 139,000 jobs in May, and the unemployment rate is expected to increase slightly from 4.2% to 4.3%.
