US private sector employment unexpectedly declined by -33k in June, according to ADP data, far below expectations for a 105k gain.
The weakness was concentrated in service-providing industries, which shed -66k jobs, while goods-producing sectors added 32k. Small businesses were hit the hardest, cutting -47k positions, while medium companies lost -15k, large firms added 30,000.
ADP Chief Economist Nela Richardson noted that while layoffs remain rare, firms are increasingly hesitant to hire or replace departing staff. “A hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” she said.
Despite the hiring slowdown, wage growth remained relatively stable. Job-stayers saw annual pay increases of 4.4% yoy in June, just slightly below May’s 4.5% yoy. For job-changers, pay growth slipped to 6.8% yoy from 7.0% yoy, suggesting firms are still offering premiums for switching jobs, though at a moderating pace.
