US Private Sector Adds 152K Jobs in May 2024, Below Expectations

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Private Businesses in the US Add 152K Jobs in May, Falling Short of Forecasts

Team FS

05/Jun/2024

Key Points:

Job Growth Below Forecasts: US private businesses added 152K jobs in May 2024, falling short of the expected 175K.
Sector-Specific Performance: Service-providing sectors saw significant gains, while goods-producing sectors experienced mixed results.
Slowing Pay Growth: Annual pay gains for job-changers and job-stayers showed a slowdown, indicating a cooling labor market.

In May 2024, private businesses in the United States added a total of 152,000 workers to their payrolls, marking the smallest increase in four months and falling significantly below market forecasts of 175,000. This figure also represents a decline from the downwardly revised 188,000 jobs added in April, indicating a notable deceleration in employment growth.

Sector Performance

The service-providing sector was the primary driver of job additions, contributing 149,000 new positions. Key areas within this sector include:

Trade, Transportation & Utilities: Added 26,000 jobs.
Education/Health Services: Added 46,000 jobs.
Financial Activities: Contributed 28,000 jobs.
Leisure/Hospitality: Saw an increase of 12,000 jobs.

However, not all service sectors experienced growth. The Information sector lost 7,000 jobs, and Professional/Business Services shed 6,000 positions, highlighting areas of weakness.

The goods-producing sector added a modest 3,000 jobs, with a mixed performance across different industries:

Construction: Led the gains with 32,000 new jobs.
Manufacturing: Lost 20,000 jobs.
Natural Resources/Mining: Decreased by 9,000 jobs.

Pay Growth Trends

The report also highlighted trends in pay growth, which showed signs of slowing:

Annual Pay Gains for Job-Changers: Fell for the second consecutive month to 7.8%.
Pay Growth for Job-Stayers: Held steady at 5% for the third month in a row.

Economic Outlook

Nela Richardson, Chief Economist at ADP, commented on the current labor market conditions: "Job gains and pay growth are slowing going into the second half of the year. The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers."

This statement underscores a cautious outlook for the labor market as the year progresses, with particular attention to areas experiencing job losses and slower pay increases.

Conclusion

The ADP employment report for May 2024 indicates a slowing in job growth, with the total number of jobs added falling short of expectations. While service-providing sectors continue to drive employment gains, the goods-producing sector shows mixed results, and pay growth trends suggest a cooling labor market. As the US economy moves into the latter half of the year, these developments will be closely watched for further signs of strength or weakness in the labor market.

Also Read : India's Agricultural Production Shows Mixed Trends in 2023-24: Third Advance Estimates Released

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