WASHINGTON, July 1 (Reuters) – U.S. private payrolls increased less than expected in June, but a sharp decline in planned layoffs pointed to stable labor market conditions last month.
Private employment rose by 98,000 jobs last month after an unrevised gain of 122,000 in May, the ADP National Employment Report showed. Economists polled by Reuters had forecast private employment would increase by 118,000.
“The pace of hiring is telling a story of both supply and demand. We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries,” said Nela Richardson, the ADP’s chief economist. “For now, the overall effect is a slowdown in job creation.”
Nearly all the jobs added last month were in the services sector, where payrolls increased by 96,000, driven by the education and health services industry.
Leisure and hospitality employment gained only 2,000 jobs, suggesting no major boost from the FIFA World Cup soccer tournament that is being jointly hosted by the U.S., Canada and Mexico. The goods-producing sector added 2,000 jobs, with gains in construction and manufacturing industries partially offset by a drop of 5,000 jobs in natural resources and mining employment.
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published a day before the release of the U.S. Bureau of Labor Statistics’ employment report for June. ADP has been a poor gauge of the BLS’ private payrolls estimate.
“The average absolute error of ADP’s forecast since January 2023 has been a hefty 79,000, with the gap exceeding 100,000 one-third of the time,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
EMPLOYMENT REPORT EXPECTED TO SHOW SLOWER GROWTH
Private payrolls likely increased by 110,000 jobs last month after advancing by 120,000 in May, according to a Reuters survey of economists. With no increase in government employment anticipated after May’s surge, overall nonfarm payrolls are forecast to have risen by 110,000 after a gain of 172,000 in May.
The unemployment rate is forecast to hold steady at 4.3% for a fourth straight month. The labor market has stabilized after stumbling last year. The government reported on Tuesday that there were 1.04 job openings for every unemployed person in May. A separate report from global outplacement firm Challenger, Gray and Christmas showed layoffs planned by U.S.-based employers dropped 53% to 45,849 in June.
Employers announced 443,604 job cuts in the first half of the year, down 40% compared to the same period last year.
“The pace of layoffs cooled considerably in June, similar to plans last June, and as is typical for summer months,” said Andy Challenger, chief revenue officer at Challenger, Gray and Christmas. “That said, the cuts we are seeing remain concentrated in technology, and artificial intelligence continues to reshape how companies think about headcount.”
Employers announced plans to hire 10,933 workers in June, down 44% from May. So far this year, companies have announced plans to hire 91,405 workers, up 10% compared to the first half of 2025. Challenger noted that hiring had dropped considerably since 2020. As a result, unemployed people are experiencing difficulties landing new opportunities.
A Conference Board survey on Tuesday showed the share of consumers viewing jobs as “hard to get” increased in June to the highest level in nearly 5-1/2 years.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)
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