Gary Kaltbaum, president of Kaltbaum Capital Management, explains in “Making Money” why a “narrow” stock market is a concern.
U.S. companies started hiring more slowly than expected in May, according to the ADP national employment report released Wednesday morning, signaling that the labor market continues to cool on the back of rising interest rates.
Businesses added 152,000 jobs last month, below the 175,000 increase forecast by LSEG economists and below April’s downwardly revised increase of 188,000. It was the worst month for job creation since January.
At the same time, the report showed that wage growth, the main driver of inflation, remained steady at 5% for the third straight month. Wages for workers who changed jobs rose 7.8%, down sharply from a 9.3% increase in April.
Job openings unexpectedly fall in April to three-year low
More than 75 employers were taking resumes and interviewing potential new hires at a job fair in Lake Forest, California, on Wednesday, February 21, 2024. (Photo by Paul Barsebach/Media News Group/Orange County Register via Getty Images/Getty Images)
“Job gains and wage growth are slowing as we move into the second half of the year,” said Nella Richardson, ADP’s chief economist. “While the labor market remains strong, we are monitoring notable weaknesses related to both producers and consumers.”
Job growth was almost entirely concentrated in the services sector, with goods producers contributing just 3,000 jobs in total.
Trade, transport and public works 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 the main job creator, added just 12,000 jobs last month.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 38732.64 | +21.35 | +0.06% |
| I:Comp | Nasdaq Composite Index | 16960.331833 | +103.28 | +0.61% |
| SP500 | S&P 500 | 5308.16 | +16.82 | +0.32% |
The number of high-paying jobs is declining
Some sectors saw larger declines last month, with manufacturing losing 20,000 jobs and natural resources and mining losing 9,000.
The weaker-than-expected report Federal Reserveraised interest rates to their highest level since 2001. Wall Street is watching closely for signs that the labor market is finally cooling off and the Fed could reverse course and start cutting rates.
A construction worker hammers a beam during roadway renovation work, Friday, Sept. 8, 2023, in the Union Market neighborhood of Washington, DC. (Photographer: Al Drago/Bloomberg via Getty Images/Getty Images)
Central bank officials have signaled they will start cutting rates later this year but have warned they need more evidence that inflation is moving back towards their 2% target.
For more information on FOX Business, click here
The data comes ahead of the Labor Department’s closely watched May jobs report on Friday morning, which is expected to show employers added 185,000 workers, an increase of 13,000 from a year earlier. 175,000 in AprilThe unemployment rate is expected to remain stable at 3.9%.
ADP figures can differ significantly from official government statistics and have historically been unreliable as an indicator of future prospects.
