U.S. Job Creation Slows in May -- ADP

By Xavier Fontdegloria

Hiring in the U.S. private sector lost pace in May, a sign of persistent tightness in the labor market amid strong demand for labor and scarcity of workers.

Employment in the nonfarm private sector rose by 128,000 in May, down from a revised 202,000 increase in April, according to data from the ADP National Employment Report released Thursday. The reading is below the 299,000 consensus forecast from economists polled by The Wall Street Journal.

"Under a backdrop of a tight labor market and elevated inflation, monthly job gains are closer to prepandemic levels," said Nela Richardson, chief economist at ADP. The 128,000 increase marks the lowest gain in payrolls since the onset of the Covid-19 pandemic.

May's gains were led by large and medium-sized business, which added 122,000 and 97,000 jobs, respectively. Small businesses cut jobs for a second consecutive month, with 91,000 jobs lost in May.

"Small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late," Ms. Richardon said.

By sector, services providers created 104,000 jobs, with education and health services adding 46,000 jobs. The leisure and hospitality sector, which had led gains in the last few months, created 17,000 jobs.

The goods-producing sector gained 24,000 payrolls, 22,000 of them in the manufacturing sector. The construction sector lost 2,000 jobs over the month, according to the ADP estimate.

The report, carried out by the ADP Research Institute along with Moody's Analytics, is based on data through the 12th of the month.

The U.S. Department of Labor is expected to release its May employment report, which covers the same period as the ADP National Employment Report, on Friday. Economists polled by The Wall Street Journal are expecting it to show nonfarm payrolls up by 328,000, while the unemployment is seen falling to 3.5%. The ADP series can diverge considerably from the Labor Department's official data.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

June 02, 2022 08:50 ET (12:50 GMT)

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