ADP National Employment Report: Private Sector Employment Increased by 152,000 Jobs in May; Annual Pay was Up 5.0%
According to the ADP National Employment Report for May 2024, private sector employment increased by 152,000 jobs, with annual pay rising by 5.0% year-over-year. However, job and pay growth are slowing. Manufacturing faced a steep decline, losing 20,000 jobs, while leisure and hospitality also saw weaker hiring. In contrast, the trade/transportation/utilities sector added 55,000 jobs, and construction gained 32,000 jobs. Regionally, the South added the most jobs (101,000), while the West lost 10,000 jobs. Small establishments saw a decrease of 10,000 jobs, whereas large establishments added 98,000 jobs. Pay gains for job-changers slowed, up 7.8%, while job-stayers saw a 5.0% increase.
- Private sector employment increased by 152,000 jobs in May 2024.
- Annual pay rose by 5.0% year-over-year.
- Trade/transportation/utilities sector added 55,000 jobs.
- Construction sector gained 32,000 jobs.
- Large establishments (500+ employees) added 98,000 jobs.
- Job gains and pay growth are slowing.
- Manufacturing sector faced a steep decline, losing 20,000 jobs.
- Leisure and hospitality showed weaker hiring.
- The West region lost 10,000 jobs.
- Small establishments saw a decrease of 10,000 jobs.
Insights
The ADP National Employment Report showing an increase of 152,000 jobs in May and an annual pay rise of 5.0% provides key insights into the health of the private sector labor market. Investors should note the overall slower job gains compared to previous months, with notable declines in manufacturing (-20,000) and information (-7,000) sectors. The strength in construction (+32,000) and trade/transportation/utilities (+55,000) sectors may indicate sector-specific growth trends.
From a financial perspective, the 5% pay increase suggests moderate inflationary pressure. Historically, wage growth is an essential indicator for consumer spending, which drives corporate revenues. However, the slowing pay gains for job-changers (down to 7.8% from 8%) may signal a cooling labor market, which could temper future consumer spending. This mixed labor market performance may lead investors to closely monitor consumer sentiment and corporate earnings reports to gauge broader economic impacts.
Short-term implications: Potential caution in equity markets due to slower job gains. Long-term implications: The overall stability in job gains and wages might support sustained economic growth but requires monitoring for sector-specific weaknesses.
The sector-specific job data provided in the ADP report offers valuable insights for investors. The decline in manufacturing jobs (-20,000) indicates possible challenges in producing goods, which might affect companies involved in supply chains or reliant on manufacturing outputs. Conversely, the increase in trade, transportation and utilities jobs (+55,000) highlights robust activity in sectors critical for logistics and distribution, which could imply strong consumer demand and economic activity in these areas.
Regional data also reveals interesting trends, with significant job gains in the South (+101,000) and Northeast (+44,000), which might reflect regional economic conditions and opportunities. Investors should consider these regional variations when assessing investment opportunities in different parts of the country.
The report’s insights into pay increases by firm size suggest that medium-sized firms (50-499 employees) are seeing the largest pay gains, potentially indicating stronger competition for talent in this segment compared to small firms. This might imply better growth prospects for medium-sized companies in the near term as they attract and retain talent more effectively.
Analyzing the ADP National Employment Report from an economic perspective provides a macro view of labor market trends. The slowing pace of job additions, coupled with modest pay increases, presents a mixed picture. The 5% year-over-year pay increase is noteworthy, aligning closely with inflation targets, which suggests a balanced labor market without excessive overheating.
The report highlights pockets of weakness in the manufacturing and leisure and hospitality sectors, critical areas that often reflect broader economic health. The decline in manufacturing employment could indicate reduced production or shifts in supply chain dynamics, potentially affecting GDP growth.
On the flip side, gains in education and health services (+46,000) reflect sustained demand in these essential sectors, suggesting resilience. Investors should watch these trends as they might influence fiscal and monetary policy decisions, impacting broader economic conditions and market behaviors.
Short-term implications: Potential cautious stance from the Federal Reserve on interest rate hikes. Long-term implications: Sustainable wage growth supporting consumer spending, balancing economic growth without significant inflation risks.
The jobs report and pay insights use ADP's fine-grained anonymized and aggregated payroll data to provide a representative picture of the private-sector labor market. The report details the current month's total private employment change, and weekly job data from the previous month. Because the underlying ADP payroll databases are continuously updated, the report provides a high-frequency, near real-time measure of
"Job gains and pay growth are slowing going into the second half of the year," said Nela Richardson, chief economist, ADP. "The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers."
May 2024 Report Highlights*
View the ADP National Employment Report and interactive charts at www.adpemploymentreport.com.
JOBS REPORT
Private employers added 152,000 jobs in May
Job gains were slower in May due to a steep decline in manufacturing. Leisure and hospitality also showed weaker hiring.
Change in
Change by Industry Sector
- Goods-producing: 3,000
- Natural resources/mining -9,000
- Construction 32,000
- Manufacturing -20,000
- Service-providing: 149,000
- Trade/transportation/utilities 55,000
- Information -7,000
- Financial activities 28,000
- Professional/business services -6,000
- Education/health services 46,000
- Leisure/hospitality 12,000
- Other services 21,000
Change by
- Northeast: 44,000
- New England -1,000
- Middle Atlantic 45,000
- Midwest: 9,000
- East North Central 6,000
- West North Central 3,000
- South: 101,000
- South Atlantic 45,000
- East South Central -4,000
- West South Central 60,000
- West: -10,000
- Mountain 8,000
- Pacific -18,000
Change by Establishment Size
- Small establishments: -10,000
- 1-19 employees 26,000
- 20-49 employees -36,000
- Medium establishments: 79,000
- 50-249 employees 49,000
- 250-499 employees 30,000
- Large establishments: 98,000
- 500+ employees 98,000
PAY INSIGHTS
Pay gains for job-changers slowed in May
Year-over-year pay gains for job-changers fell for the second month. Pay for job-changers was up 7.8 percent while pay growth for job-stayers held steady for the third month at 5 percent.
Median Change in Annual Pay (ADP matched person sample)
- Job-Stayers
- Job-Changers 7.
Median Change in Annual Pay for Job-Stayers by Industry Sector
- Goods-producing:
- Natural resources/mining
4.4% - Construction
5.3% - Manufacturing
4.7%
- Service-providing:
- Trade/transportation/utilities
4.6% - Information
4.6% - Financial activities
5.1% - Professional/business services
4.8% - Education/health services
5.5% - Leisure/hospitality
5.5% - Other services
5.3%
Median Change in Annual Pay for Job-Stayers by Firm Size
- Small firms:
- 1-19 employees
4.2% - 20-49 employees
5.0%
- Medium firms:
- 50-249 employees
5.2% - 250-499 employees
5.0%
- Large firms:
- 500+ employees
4.9%
To see Pay Insights by
* Sum of components may not equal total, due to rounding.
The April total of jobs added was revised from 192,000 to 188,000. The historical data file, and weekly data for the previous month, is available at https://adpemploymentreport.com/.
The April Pay Insights numbers have also been revised from 9.3 percent to 8 percent for job-changers due to a process correction in March to the Pay Insights data.
To subscribe to monthly email alerts or obtain additional information about the ADP National Employment Report, including employment and pay data, interactive charts, methodology, and a calendar of release dates, please visit https://adpemploymentreport.com/.
The June 2024 ADP National Employment Report will be released at 8:15 a.m. ET on July 3, 2024.
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The ADP National Employment Report is an independent measure of the change in
The ADP National Employment Report is broadly distributed to the public each month, free of charge, as part of the company's commitment to offering deeper insights of the
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