US Private Sector Adds 150,000 Jobs in June According to Investing.com

ROSELAND, NJ – The U.S. private sector added 150,000 jobs in June and annual wages rose 4.9 percent compared to the same month last year, according to the ADP® National Employment Report™.

This independent index of private-sector employment and wages is based on actual pay data for more than 25 million U.S. workers and is produced by the ADP Research Institute® in partnership with the Stanford Digital Economy Lab.

Employment growth in June was significantly supported by the leisure and hospitality sector, which added 63,000 positions. Without that sector’s performance, the monthly employment data would have been much weaker, according to ADP’s chief economist. The report also noted that job creation among private employers has slowed for three consecutive months.

In terms of wages, growth among those staying in their current jobs slowed to 4.9 per cent, the weakest pace since August 2021. Job changers also saw their wages grow more slowly, at 7.7 per cent.

The report provides a detailed breakdown of employment changes by industry, U.S. region and facility size. The goods manufacturing sector added 14,000 jobs, with construction leading the way with 27,000 new jobs, while manufacturing and natural resources/mining saw declines.

The services sector created 136,000 jobs, with significant growth seen in professional/business services and trade/transport/utility services.

Geographically, the South led with 80,000 new jobs, followed by the Northeast with 31,000. The Midwest and West added 26,000 and 4,000 jobs, respectively. When analyzed by establishment size, midsize firms (50-499 employees) showed the greatest growth, adding 88,000 jobs.

The data also provided insight into wage growth across industry sectors and company sizes. The largest increases were seen by workers in the entertainment and hospitality and education and health sectors.

The May employment figure was revised upward from 152,000 to 157,000. This monthly report is part of ADP’s commitment to offering deeper insights into the labor market and is distributed widely to the public at no cost.

The next ADP National Employment Report is scheduled for release on July 31, 2024. This article is based on a press release from ADP, Inc.

In other recent news, Automatic Data Processing (NASDAQ:) reported solid financial results in its third quarter of fiscal 2024, with revenue growth of 7 percent and adjusted diluted earnings per share (EPS) growth of 14 percent.

The strong results prompted the company to revise its full-year guidance to higher Employer Services (ES) retention and margins, and increased interest income from client funds due to rising interest rates. ADP is forecasting growth of 2% for the year, at the high end of its previous guidance of 1% to 2%. The company also expects an effective tax rate of around 23% and adjusted EPS growth of 10% to 12% in fiscal 2024.

RBC Capital maintained a Sector Perform rating on ADP with a constant price target of $267.00. The firm expects fiscal 2025 guidance to indicate revenue growth of 4.5%-5.5% and earnings per share (EPS) growth of 7%-9%.

Meanwhile, TD Cowen maintained a Hold rating on ADP shares, albeit with a slight reduction in its target price per share from $253 to $251. This adjustment reflected growth in ADP’s outstanding earnings, offset by reduced expectations for future margin expansion.

Recent events demonstrate ADP’s ability to navigate a challenging market environment and deliver solid results, which has been recognized by both RBC Capital and TD Cowen.

InvestingPro Insights

As highlighted in the ADP® National Employment Report™, which highlights the performance of the U.S. private sector, Automatic Data Processing, Inc. (ADP) continues to make significant contributions to the analysis of employment data. With a market capitalization of $96.85 billion, ADP’s influence on the labor market is supported by significant financial strength. The company’s commitment to consistent dividend growth is notable, as it has raised its dividend for 25 consecutive years, demonstrating its financial stability and shareholder-friendly policies.

InvestingPro data indicates that ADP is operating with a trailing twelve-month price-to-earnings (P/E) ratio of 26.22, suggesting a premium valuation relative to near-term earnings growth. Additionally, ADP stock tends to exhibit low price volatility, providing a degree of stability for investors. The company’s dividend yield in mid-2024 is 2.37%, coupled with a dividend growth of 12.0%, which could be attractive to income-seeking investors.

For those looking to dig deeper into ADP’s financials and stock performance, additional InvestingPro tips are available, including insights into the company’s position as a leading player in the professional services industry and its moderate level of debt. InvestingPro subscribers can access these tips and more that can help you make informed investment decisions. Use coupon code PRONEWS24 to get up to 10% off when you purchase an annual Pro subscription and an annual or two-year Pro+ subscription for comprehensive analysis and exclusive information.

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