Only 32,000 private sector jobs were created in May, the lowest in two years.
Hiring in the private sector slowed significantly last month, according to the ADP National Employment Report for May.
The ADP report, which tracks the private sector jobs market, found that U.S. employers only added 37,000 jobs in May, which is the lowest monthly total since March 2023. Also, it was woefully below economists’ estimates of 110,000 jobs created in May.
It follows a subpar month in April when just 62,000 new jobs were added, well short of estimates of 120,000 new jobs.
Most of the hiring in May came from the leisure and hospitality industry, which added 38,000 jobs. The financial sector added 20,000 jobs, while the information industry created 8,000 new jobs. Further, construction added 6,000 positions in May, while other services accounted for 4,000 new jobs.
The biggest job losses came from professional and business services, where job totals plummeted by 17,000. Also, there were 13,000 fewer jobs in education and health services, and 5,000 less in natural resources and mining. Further, jobs in trade, transportation, and utilities dipped by 4,000, while manufacturing jobs shrank by 3,000.
Small businesses are the hardest hit
Looking at hiring patterns by the size of the company, only mid-sized firms, those with between 50 and 249 employees, were hiring in May, adding 51,000 positions.
Small businesses were the hardest hit, as firms with less than 20 employees lost 6,000 jobs and companies with between 20 and 49 employees lost 7,000 jobs. That was far more than larger companies, those with over 250 employees, as they had about 5,000 fewer jobs in total last month.
The cratering private sector jobs market may ratchet up the pressure on the Federal Reserve to lower interest rates, as a weaker jobs market is typically a sign of a flagging economy.
Still, 99% of interest rate traders expect the Federal Open Market Committee (FOMC) to keep rates where they are at their upcoming June 18 meeting.
Investors will get a fuller picture of the jobs market on Friday when the Bureau of Labor Statistics releases the unemployment report for May, which tracks public and private sector jobs. Economists are expecting 125,000 new jobs in May and an unemployment rate of 4.2%.
