Private sector adds just 27,000 jobs in May, missing Wall Street’s expectations
U.S. private sector hiring grew by just 27,000 jobs in May, according to the ADP National Employment report, fueling renewed concerns that the U.S. economy is slowing as investors worry about the impact of a lengthy U.S.-China trade war and new Mexico tariffs on the markets.
Analysts polled by Refinitiv had expected an increase of 180,000 jobs.
“Job growth is moderating,” said Mark Zandi, chief economist of Moody’s Analytics, in a statement. “Labor shortages are impeding job growth, particularly at small companies, and layoffs at brick-and-mortar retailers are hurting.”
U.S. stock futures pared gains after the report’s big miss.
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Most job losses came at companies with fewer than 50 employees, which reported a loss of 52,000 jobs. Medium business — with up to 499 employees — reported almost zero growth, with a measly 11,000 jobs added. Large businesses, meanwhile, added 68,000 jobs, according to the report — likely because they have the necessary resources to compete for workers in a tight labor market.
The much weaker-than-expected number follows last month’s surge of 275,000 jobs, which economists believed overstated the economy’s strength. But the near stop in private sector job growth could provide renewed fodder to policymakers at the Federal Reserve to cut interest rates, as they look for signs of slowing growth (a result of trade uncertainties) and muted inflation.
The results precede the release on Friday by the Labor Department of the monthly jobs report, which will provide further insight into whether the nation’s economy is slowing amid an escalated trade war between the U.S. and China The U.S. economy is expected to have added 185,000 jobs. Job growth in April surged by 263,000.