The ADP National Employment Report is a measure of non-farm private sector employment, which is obtained by utilizing an anonymous subset of roughly 400,000 U.S. businesses, which are clients of ADP. Typically, an increase in employment fuels growth in the American economy, while a decrease in employment slows growth.
In May, private sector employment rose 0.10% to 129.3 million payrolls. The 128,225 came in considerably below expectations, which were around 300,000. Not only did May’s print come in below expectations, but April’s number was also downwardly revised from 427,000 to 202,000. Payrolls in goods-producing industries increased by 24,011 to 21.2 million, while the number of jobs in the services sector rose by 104,215 to 108.1 million. Large businesses added 122,000 workers and midsized businesses added 97,000. However, small businesses shed 91,000 payrolls last month.
Growth in private employment moderated last month, increasing at the slowest pace in two years. The deceleration was mostly attributed to small business, which have been struggling to find and retain workers—especially compared to large firms—in what has become the tightest labor market in history. However, it is likely too early to sound any alarms; firms have not only recovered all the jobs they lost during the pandemic, but private sector employment has surpassed pre-pandemic levels by about 1.08 million. The pace at which businesses were hiring was bound to return to more normal levels at some point. Prior to the pandemic, payroll growth was averaging 158,000 per month. Going back to those levels is more likely to signal a return to normalcy for the labor market rather than an economic downturn. This is especially true because job gains last month were relatively broad-based, with notable increases in sectors like education, professional services, trade, leisure and hospitality, financial activities, and manufacturing. That is something that seldom occurs when the economy is entering a recession, although stranger things have happened.
June 2, 2022