US private payrolls experienced an unexpected contraction in June, marking the first decline in over two years. According to the ADP National Employment Report, private payrolls decreased by 33,000 jobs last month. This downturn, the first since March 2023, follows a downwardly revised increase of 29,000 jobs in May. Economists surveyed by Reuters had anticipated a gain of 95,000 jobs for June.
The report revealed job losses across several sectors, including professional and business services, education and health services, and financial activities. However, some industries experienced growth, with the leisure and hospitality, manufacturing, and construction sectors adding jobs. The ADP report is jointly developed with the Stanford Digital Economy Lab.
The ADP report was released ahead of the more comprehensive employment report for June from the Labor Department’s Bureau of Labor Statistics (BLS). The BLS employment report is being published a day early because of the US Independence Day holiday. Economists have cautioned against placing too much emphasis on the ADP figures, citing its historical inconsistency in predicting official payroll numbers. No correlation exists between the ADP and BLS employment reports.
The forthcoming BLS report will provide a more complete picture of the employment landscape. Market participants will be closely watching to assess the overall health of the labour market and its potential impact on economic policy.
