US Private-Sector Job Gains Slow to 29,000 for Third Straight Week

Q: With weekly hiring slowing but monthly reports booming, is the Fed seeing a mirage or a true economic turning point?

The Fed is probably seeing neither a mirage nor a clean turning point, but a labor market that is still firm while losing some momentum at the margins. The weekly ADP pulse matters because it can catch changes earlier than monthly reports, and its three-week slowdown suggests hiring demand may be cooling. But it is also noisy, lagged by two weeks, and narrower than the monthly ADP and BLS reports. By contrast, the May monthly numbers were broadly strong: ADP showed 122,000 private jobs, BLS showed 172,000 nonfarm payroll gains, prior months were revised up, and unemployment held at 4.3%. That is not recession-like data. What makes the picture tricky for the Fed is that labor supply growth may now be near zero because of slower population growth and aging. That means even modest job gains can keep the labor market tight. In that context, monthly gains above 100,000 are stronger than they look, not weaker. Inflation is the bigger reason the Fed is unlikely to dismiss the strong payroll data. Core PCE and core CPI remain above target, energy prices have surged, and several Fed officials have warned that inflation risks are tilted upward. Wage growth has cooled, but not enough to offset broader price pressure. So the Fed is likely treating the weekly slowdown as an early caution signal, not proof of a downturn. For now, the stronger monthly hiring data and sticky inflation argue for a hawkish hold, with the risk of another rate hike still more credible than a near-term cut.

3 articles · Updated · en.sedaily.com · Jun 9

ADP’s weekly measure showed US private employers added an average 29,000 jobs in the four weeks through May 23, extending a three-week slowdown.
The pace had already cooled from 40,750 three weeks earlier to 35,750 and then 30,500, pushing the latest reading below 30,000.
ADP’s weekly series carries a two-week lag, limiting its value as a real-time signal and leaving it at odds with stronger monthly hiring data.
May private payrolls rose 122,000 in ADP’s monthly report, above April’s 109,000 and forecasts for 110,000, while official nonfarm payrolls increased 172,000.
If broader hiring stays firm despite the weekly slowdown, the data could reinforce expectations that the Federal Reserve may keep pressure on rates.