Private Sector Job Growth is Slowing Dramatically

The economy seemed to be off to a pretty good—albeit somewhat—rocky, this year, but that might be coming to an end.  The latest numbers show a sharp decline in private payrolls between April and May, with totals only around 27,000.

According to payroll processing company ADP, American businesses added only 27,000 jobs in May. That is the fewest number of new jobs since March of 2010.  This is a shocking development, to boot, but it is likely a sign that the global economy is getting weaker; and many blame the Trump administration’s new tariffs for this deceleration. 

May’s job growth is extremely small when compared with April’s, which came in around 271,000.  ADP Research Institute co-head and vice president Ahu Yildirmaz also notes, “Large companies continue to remain strong as they are better equipped to compete for labor in a tight labor market.”

If you are not aware, ADP’s report uses actual payroll data to make its determinations. And what ADP has determined, this year, could be viewed as alarming.  For one, ADP found that small businesses—which are those who have 49 or fewer employees—actually lost 52,000 jobs in May.  On the other hand, companies with between 50 and 499 employees—the medium-sized businesses—managed to gain 11,000 jobs.  Companies bigger than 500 employees performed the best, gaining 68,000 jobs. 

Specific industries ebb and flow with these metric, too. For example, the construction industry, as a whole, shed 4,000 jobs last month.  The manufacturing sector lost 3,000 jobs.  The leisure and hospitality industry added 16,000 jobs and the education and health sectors far outperformed the others with gains around 33,000.

In all, the United States Department of Labor says that US private payroll employment could have grown by 175,000, in May. That is quite notably down from the 236,000 jobs added in the month before.  Total non-farm payrolls are expected to have changed by as much as 185,000.  Finally, the unemployment rate, right now, is forecast to hold steady at 3.6 percent (recorded last month). 

ADP’s monthly report does not include government hiring. Furthermore, the employment data—which is supported by Moody’s Analytics—is usually different from the government’s official jobs report. This report is due on Friday.