Jobs Crash? ADP Report Shows Private Payrolls Unexpectedly Shrank By 33,000 in June

The U.S. private sector lost 33,000 jobs in June, according to new data from payroll-processing firm ADP, marking a sharp reversal from expectations of continued employment growth and raising fresh concerns about the labor market’s trajectory.

Economists surveyed by Dow Jones had forecast a gain of 100,000 jobs for the month. Instead, the report released Wednesday morning showed the first monthly decline in private-sector employment since January 2021.

Manufacturing, which had been a weak spot in the labor market, added a solid 15,000 jobs.

“This is a sharp reversal in the labor market,” said Nela Richardson, chief economist at ADP, in a statement accompanying the release. She noted that “wages adjusted for inflation have improved over the past six months,” and suggested that the labor market may be normalizing following years of rapid post-pandemic recovery.

Small businesses were particularly hard-hit, shedding 5,000 jobs overall, with firms employing fewer than 20 workers cutting 9,000 positions. Medium-sized companies—those with 50 to 499 employees—lost 32,000 jobs. Large companies showed slight gains, adding 12,000 workers.

Despite the downturn in hiring, wage growth remained steady. Annual pay rose 4.4 percent year-over-year in June, holding the same pace as in May. Pay gains were strongest in leisure and hospitality, up 4.9 percent, while manufacturing and professional services showed more moderate increases.

The report arrives two days ahead of the government’s official employment report, which includes both public and private payrolls. The ADP figures are often viewed as a preview of broader labor market trends but the company says its report is no longer designed to anticipate the official figures. Intead, it is intended as an independent measure of the labor market and demand for workers. Even prior to post-pandemic changes, the ADP often diverged sharply from the Labor Department’s data.

Economists expect the June employment report set to be released Thursday will show employers added 115,000 workers in June, down from 139,000 in May. Private sector employers are forecast to have added 100,000.

An unexpecgted contraction in employment could put pressure on the Fed to cut interest rates as soon as its July meeting. President Donald Trump has been calling on the Fed to cut interest rates for months, sharply criticizing chairman Jerome Powell, who he has nicknamed “Too Late.”

Markets responded cautiously to the release, with investors weighing whether the weaker jobs data could influence the Federal Reserve’s rate policy. While inflation has cooled in recent months, Fed officials have emphasized the importance of a stable labor market in setting the path for future interest rate decisions.