CNN
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\n The US private sector lost jobs in June, the first negative month in more than two years, according to new data Wednesday from payroll provider ADP.\n <\/p>\n
\n US employers lost an estimated 33,000 jobs, according to ADP\u2019s monthly national employment report.\n <\/p>\n
\n Economists were expecting ADP\u2019s report to show a net gain of 115,000 jobs, according to FactSet.\n <\/p>\n
\n The losses were driven largely by stalled hiring plans, Nela Richardson, chief economist for ADP said.\n <\/p>\n
\n \u201cThough layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,\u201d she said in a statement. \u201cStill, the slowdown in hiring has yet to disrupt pay growth.\u201d\n <\/p>\n
\n ADP\u2019s tabulations don\u2019t always correlate with the official federal jobs report \u2014 for example, ADP\u2019s March 2023 reading was eventually revised down to a net loss of 53,000 jobs, while the official jobs data shows a net gain of 48,000 private-sector jobs of the overall 85,000 jobs added (largely due to a 30,000-job lift then from state and local governments).\n <\/p>\n
\n However, the trajectory of what ADP reports is sometimes looked to as a proxy for overall hiring and wage growth activity. At the time, March 2023 marked the slowest monthly gain since a decline in December 2020.\n <\/p>\n
\n When the latest employment snapshot from the Department of Labor is released Thursday at 8:30 a.m. ET (one day early due to the July 4th holiday), economists expect it to show that 115,000 jobs were added in June. That\u2019s a pullback from the 139,000 initially estimated for May, according to FactSet.\n <\/p>\n
\n They also expect the unemployment rate to increase by 0.1 percentage point, to 4.3%, which would be the highest jobless rate since October 2021.\n <\/p>\n
\n Wednesday\u2019s ADP tally is the first negative reading since March 2023 and, when considering unrevised first reports, it\u2019s the first negative reading anytime in the past few years, noted Abiel Reinhart, economist at JPMorgan.\n <\/p>\n
\n During the past year, the average absolute error between ADP and the BLS number has been about 75,000 the past year, Reinhart said, noting that one reason for the discrepancy is that the BLS number is higher on first estimate and revised downward.\n <\/p>\n
\n \u201cBut the bigger story here beyond the month-to-month forecasting performance of ADP is that the series is clearly weakening, and this has been occurring quite steadily since the start of the year,\u201d he wrote in a note to investors on Wednesday.\n <\/p>\n
\n Some economists said Wednesday they weren\u2019t changing their estimates for Thursday in the wake of the ADP news.\n <\/p>\n
\n Pantheon Macroeconomics economists said they were anticipating private payrolls to see a net gain of 100,000 jobs, which would probably still be strong enough for the Federal Reserve to stay on pause later this month. Pantheon economists said the ADP number \u201cdefies credulity,\u201d noting a loss of 52,000 jobs in health care and education, a sector that\u2019s been adding 77,000 on average the past six months.\n <\/p>\n
\n Still, there\u2019s a potential for education and health care to have weaker growth in June. That sector\u2019s job gains tend to be softer in the summer, and the slowdown may be worse this year \u201cdue to the low hiring-low firing labor market\u201d and federal spending cuts, Bank of America economists noted this week.\n <\/p>\n
\n ADP\u2019s negative number did appear to move the rate cut needle a little bit for investors. The markets expectations for a July rate cut increased to 25% from just under 21% the day before, according to CME Group\u2019s FedWatch Tool<\/a>.\n <\/p>\n \n Labor market data can often be a slow burn.\n <\/p>\n \n Typically, it takes a little time for economic shifts to be reflected in the numbers (with exceptions being major shocks, say, like a global pandemic).\n <\/p>\n \n The first six months of President Donald Trump\u2019s second term in office have been marked by sweeping policy actions \u2014 including broad-based tariffs, deportations, federal spending cuts and government workforce layoffs \u2014 that have the potential to reshape the American economy and global order.\n <\/p>\n \n However, while it may take time for these policies to work their way through the economy and become clearer in economic data, the indirect impacts already are making their mark:\n <\/p>\n \n Job growth is becoming anemic, Ron Hetrick, senior labor economist at Lightcast, told CNN in an interview.\n <\/p>\n