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Construction is booming in states like Arizona, California, Florida and Texas.
Hiring by U.S. companies slowed more than expected in June, pointing to a labor market that is continuing to cool in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.
Companies added 150,000 jobs last month, missing the 160,000 gain that economists surveyed by Refinitiv predicted and down from the revised 157,000 figure in May.
At the same time, the report showed that wage growth — a key driver of inflation — dropped slightly to 4.9%, the slowest pace of growth since August 2021. For workers who changed jobs, wages climbed 7.7%, down from the 7.8% increase recorded in May.
WHITE-COLLAR WORKERS ARE STRUGGLING TO FIND JOBS AS THE LABOR MARKET SLOWS
Job growth was almost entirely concentrated in the services sector, with goods producers contributing just 3,000 jobs to the total. (Paul Bersebach/MediaNews Group/Orange County Register via / Getty Images)
Job growth was almost entirely concentrated in the services sector, with goods producers contributing just 14,000 jobs to the total.
Hospitality and leisure accounted for the bulk of the gains, adding 63,000 new jobs. Job growth beyond that sector was mostly anemic. The construction industry added 27,000 workers in June, followed by professional and business services with a gain of 25,000.
THE NUMBER OF HIGH-PAYING JOBS IS DWINDLING
There were also sectors that saw notable declines last month. Natural resources and mining shed 8,000 jobs, while manufacturing lost 5,000.
“Job growth has been solid, but not broad-based,” said Nela Richardson, ADP chief economist. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”
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The weaker-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has raised interest rates to the highest level since 2001. Wall Street is watching the labor market closely for signs that it is finally cooling, so the Fed can pivot to cutting interest rates.
Central bank officials have indicated that rate cuts will begin later this year but cautioned they need to see more evidence that inflation is returning to their 2% target.
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The data precedes the release of the more closely watched June jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 190,000 workers, following a gain of 272,000 in May. The unemployment rate is expected to hold steady at 4%.
ADP numbers can differ drastically from the official government count and have historically been an unreliable indicator of what is to come.
