U.S. private sector job gains slowed again in May due to a slowdown in manufacturing, payrolls firm ADP said on Wednesday, in a further sign that the world’s largest economy could be cooling.
Employers added 152,000 jobs last month, down from a revised 188,000 in April and fewer than analysts expected, the report said.
That was due to a sharp decline in manufacturing, ADP added, noting that leisure and hospitality also showed softer job growth.
“The labor market is solid, but we are tracking notable pockets of weakness linked to both producers and consumers,” ADP chief economist Nella Richardson said in a statement.
He added that both employment and wage growth are slowing entering the second half of the year.
A cooler labor market could give the U.S. central bank more confidence to turn to interest rate cuts soon, a move that could boost the U.S. economy.
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For now, the Federal Reserve is keeping interest rates at their highest level in more than two decades, aiming to reduce demand and counter inflation with higher borrowing costs.
In May, manufacturing jobs fell by 20,000 while those in leisure and hospitality rose by 12,000, ADP said.
Most of the job gains were in service sectors, with the largest increases in sectors such as trade, transport and utilities, as well as education and health services.
Earnings for those who changed jobs also fell for a second month, to 7.8%.
Pay growth for staff who remained in their roles was flat for a third month at 5.0 percent, the report said.
Slower growth
“We expect the labor market to ease going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
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“But we expect employment growth to remain positive and the unemployment rate to remain low, which should support economic activity this year,” he added in a note.
Markets will also be closely watching a government jobs report due on Friday for its impact on Fed policy.
Job growth is likely to ease further in the summer months given the “continued decline in vacancy readings and the sharp decline in hiring intentions in business surveys,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
There was also a “deterioration in the leading indicators of layoffs,” he said.
Source: AFP