Job Growth Scare: Private Payrolls Rise Just 27,000 in May

Job creation south of the border skidded to a near-halt in May in another sign that economic momentum is slowing.

US private sector hiring grew by just 27,000 jobs in May, according to the ADP National Employment report, fueling renewed concerns that the USA economy is slowing as investors worry about the impact of a lengthy U.S. While the reports are not expected to be identical, the ADP report acts as a directional bias to economist expectations on each report. Since then, the private payrolls count has increased by 21.3 million.

May's reading also marks a sharp reduction from April's slightly downwardly revised reading of 271,000 new private sector positions, from 275,000 seen previously.

If the latest manufacturing and factory data (released earlier this month) prompted cause for concern, a preliminary estimate of the nation's employment situation for the month of May could prove panic-inducing. The U.S. economy could expand at just a 1.5% annual pace in the April-June quarter, analysts forecast.

Most troubling? Companies employing fewer than twenty people lost a whopping 52,000 jobs during the month of May - underscoring the extent to which employment dips disproportionately impact small businesses. Larger companies typically are able to offer higher pay and more benefits and are better able to hire in a tight job market.

The employment picture may face further headwinds in coming months as companies deal with potential supply chain issues and pinched margins amid intensifying tensions with some the United States' largest trading partners.


The report revealed growth for 16 major industries, which include real estate, finance, insurance, information, social assistance, and healthcare.

Among the top two business sectors, according to ADP, those in the service-producing industry added 71,000 jobs, while the goods-producing industry had a loss of 43,000 positions.

Employment in the services industry had increased by as much as 4.4 points; its highest point in over seven months.

Markets are betting that the Federal Reserve steps in with at least two and possibly three rate cuts this year.

The good news was preceded by data that showed a slowing USA economy worsened by weak consumer spending and a decline in manufacturing.

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