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    Home » Private employers add fewest workers in over 2 years as ‘hiring hesitancy’ hits a slowing US labor market
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    Private employers add fewest workers in over 2 years as ‘hiring hesitancy’ hits a slowing US labor market

    userBy userJune 5, 2025No Comments4 Mins Read
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    Private payroll additions tumbled in May as weak consumer sentiment and trade policy uncertainty weighed on hiring.

    On Wednesday, data from ADP showed private payrolls grew by just 37,000 in May, far fewer than the 114,000 expected by economists and below the 60,000 new jobs added in April. This marked the smallest increase in private payrolls since March 2023.

    “The weak numbers we’re seeing now does not point to a labor market that’s collapsing, but there is hiring hesitancy,” ADP chief economist Nela Richardson said on a call with reporters.

    The survey encapsulated the week of May 12, meaning it included the initial reaction to the US-China 90-day tariff pause. Additionally, Trump’s baseline tariffs of 10% on various countries were in effect.

    Richardson said trade policy uncertainty is just one of several factors weighing on hiring, with weak consumer sentiment also potentially weighing on labor market activity.

    “It’s like driving through fog for some of our firms here,” Richardson told Yahoo Finance during the call with reporters. “When you’re in that situation, you can’t really stop, but you might slow down. And so that’s what we’re seeing.”

    Read more: How jobs, inflation, and the Fed are all related

    She pointed to strong wage growth and low layoffs as points of strength in the labor market. ADP’s May data showed wages for workers who changed jobs grew 7% while wages for those who stayed in the same job grew 4.5%. Both were unchanged from the month prior.

    “The key takeaway is a slowdown in hiring momentum, but still a labor market that’s in good enough shape to support consumer spending and provide the Fed the latitude they’ve had on rates while it continues to decipher its inflation outlook,” Richardson said.

    Richardson added that while May’s data was weighed down by the economic “fog,” it isn’t a clear sign the labor market is taking a turn for the worse.

    “I do think that once the uncertainty clears a bit, you’ll see more activity in the labor market,” Richardson said.

    President Trump posted about the numbers on Truth Social shortly after the release, calling for Federal Reserve Chair Jerome Powell to cut interest rates.

    “ADP NUMBER OUT!!! “Too Late” Powell must now LOWER THE RATE,” Trump said. “He is unbelievable!!! Europe has lowered NINE TIMES!”

    New data from ADP showed private payrolls grew by just 37,000 in May, far fewer than the 114,000 expected by economists and below the 60,000 new jobs added in April. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images) · ANDREW CABALLERO-REYNOLDS via Getty Images

    In another sign that tariff uncertainty is weighing on economic data, the Institute for Supply Management’s Services PMI registered a reading of 49.9 in May, below the 51.6 seen in April and lower than the increase to 52 economists had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. May’s data marked just the fourth time the services sector has fallen into contraction in the past five years.

    New orders tumbled to a reading of 46.4 in May, below the 52.3 seen the month prior. Meanwhile, the prices paid index increased to 68.7, up from 65.1 in April. This marked the highest prices paid reading since November 2022, when the Consumer Price Index (CPI) had shown inflation at 7.1%.

    Steve Miller, the chair of ISM’s Services Business Survey, said in the release that “Tariff impacts are likely elevating prices paid.”

    “May’s PMI level is not indicative of a severe contraction, but rather uncertainty that is being expressed broadly among ISM Services Business Survey panelists,” Miller said. “The average reading of 50.8 percent over the last three months still indicates expansion in that time period, but it is a notable shift of 2 percentage points below its average of 52.8 percent over the previous nine months.”

    Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

    Click here for the latest economic news and indicators to help inform your investing decisions

    Read the latest financial and business news from Yahoo Finance





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