New data from ADP shows that private sector job gains in the US fell to just 37,000 in May, well below expectations of 114,000 and April's 60,000. This was the smallest increase since March 2023, reflecting employers' reluctance to hire new workers amid economic uncertainty and escalating trade policy.
According to ADP Chief Economist Nela Richardson, the slowdown is not a sign of a labor market collapse, but rather a cautious attitude of companies in a "foggy" economic environment. Factors such as weak consumer sentiment and President Trump's tariff policies, including a 90-day suspension of US-China tariffs, have also contributed to the uncertainty in the labor market.
Nevertheless, the data shows that the labor market remains strong, with wage growth remaining strong, with workers who changed jobs receiving a 7% increase. While those who stayed put received a 4.5% increase. Richardson emphasized that while hiring momentum has slowed, it is still sufficient to support consumer spending and give the Federal Reserve room to remain cautious in its interest rate policy.
President Trump, via Truth Social, quickly used these figures to urge Fed Chairman Jerome Powell to cut interest rates. While uncertainty still lingers in the labor market, Richardson expects more hiring activity to occur once the economic outlook becomes clearer.
