Private companies created only 150,000 jobs in June, which was less than expected

U.S. corporate payrolls fell more than expected in June, according to the ADP National Employment Report released Wednesday morning, indicating that the labor market is still cooling due to higher interest rates.

Companies created 150,000 jobs last month, an increase of 160,000 expected by economists surveyed by Refinitiv and a decline from a revised figure of 157,000 in May.

At the same time, the report showed wage growth — a key driver of inflation — fell slightly to 4.9%, the slowest pace of growth since August 2021. For workers who changed jobs, wages rose 7.7%, compared with a 7.8% increase in May.

WHITE COLLAR WORKERS HAVE TROUBLE FINDING WORK AS THE JOB MARKET SLOWS DOWN

Employment growth was concentrated almost entirely in the services sector, with goods producers accounting for just 14,000 jobs.

Hospitality and leisure accounted for most of the gains, adding 63,000 jobs. Employment growth outside that sector was mostly anemic. Construction added 27,000 workers in June, followed by professional and business services with an increase of 25,000.

NUMBER OF WELL PAID JOBS MARZA

There were also sectors that saw notable declines last month. Natural resources and mining lost 8,000 jobs, while manufacturing shed 5,000.

“Job gains were solid but not broad-based,” said Nela Richardson, ADP’s chief economist. “Without a rebound in employment in the leisure and hospitality industries, June would have been a down month.”

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The weaker-than-expected report follows an aggressive monetary policy tightening campaign by Federal Reservewhich raised interest rates to their highest level since 2001. Wall Street is closely watching the labor market for signs that it is finally starting to cool so that the Fed can cut interest rates.

Central bank officials have suggested interest rate cuts will begin later this year, but cautioned that more evidence is needed to show inflation is returning to its 2% target.

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The data comes ahead of Friday morning’s release of the Labor Department’s closely watched June jobs report, which is expected to show that employers hired 190,000 workers after an increase of 272,000 in MayThe unemployment rate is expected to remain stable at 4%.

ADP data can differ significantly from official government data and has historically not been a reliable indicator of the future.