Private payrolls rose 98,000 in June, below expectations, ADP says

• Education and health services accounted for nearly half the job growth with 48,000 positions, while leisure and hospitality added only 2,000 jobs, indicating weak consumer demand
• Annual pay growth held at 4.4% for workers staying in jobs but rose to 6.6% for job switchers, suggesting continued wage pressure
• Small businesses (under 50 employees) led hiring with 53,000 new jobs, while large companies (500+ employees) added only 25,000 positions

Summary: Private Payrolls Rise 98,000 in June, Missing Expectations

Key Figures:

Private sector employment increased by 98,000 jobs in June, below the Dow Jones consensus forecast of 110,000 and down from May's 122,000, according to ADP's Wednesday report.

Sector Performance:

Education and health services dominated job creation, accounting for nearly half (48,000) of new positions. The services sector added all but 2,000 of total jobs. Other gainers included:

• Trade, transportation, and utilities: +15,000
• Financial activities: +14,000
• Other services: +8,000
• Leisure and hospitality: +2,000 (notably weak)

Natural resources and mining was the only sector posting losses (-5,000).

Wage Growth:

Annual pay increases remained steady at 4.4% for workers staying in their positions, while job switchers saw wages rise 6.6%, edging slightly higher.

Company Size Breakdown:

Small businesses (under 50 employees) led hiring with 53,000 additions, while large companies (500+ employees) added 25,000 positions.

Market Implications:

The tepid hiring pace signals both supply and demand challenges in the labor market. ADP Chief Economist Nela Richardson noted labor supply constraints in certain industries and longer job search times are contributing to slower job creation. The weak leisure and hospitality gains suggest potential softening in consumer demand.

Looking Ahead:

The official Bureau of Labor Statistics nonfarm payrolls report, due Thursday, is expected to show 115,000 jobs added, with unemployment steady at 4.3% and annual wage growth of 3.5%. ADP figures have recently undershot official government reports.