Private sector job count diminished by 33,000 in June contrary to projected gain of 100,000, as asserted by ADP.
The latest ADP private sector hiring data for June 2025 reveals a significant shift in the U.S. labor market, as U.S. private employers shed 33,000 jobs. This marks the first month of job losses in the private sector in over two years, and falls far short of analyst expectations of around 98,000–99,000 jobs added.
The job losses were primarily in service roles tied to professional and business services, and health and education, with a decline of 56,000 jobs in professional/business services and a net loss of 52,000 jobs in health and education. In contrast, businesses with fewer than 20 employees accounted for 29,000 lost roles on net, while businesses with more than 500 employees saw the biggest payroll growth in the month, with an increase of 30,000 jobs.
The Midwest and Western U.S. saw the strongest contractions in June, with declines of 24,000 and 20,000, respectively. The Southern U.S. was the only region to see payrolls expand on net, with an increase of 13,000 positions. Financial activity roles also experienced a decline of 14,000 jobs in June.
The unemployment rate is expected to tick higher to 4.3% from 4.2% in the government's nonfarm payrolls report, which is due to be released the day after the ADP report. Economists had forecast an increase of 100,000 jobs for June, but the ADP data suggests the opposite, stoking concerns about labor market health.
The rate of pay increase for those staying in their jobs decreased to 4.4% from 4.5%, while those getting new roles saw a decrease in the rate of pay increase, sliding to 6.8% from 7%.
The data indicate a cooldown in the labor market, with employers showing hesitancy to hire and reluctance to replace departing workers, especially in the services sector. The result was described as the most worrying job market indicator since the recent imposition of tariffs under President Trump, which has fueled economic uncertainty.
Despite the overall decline, some sectors like leisure and hospitality, and manufacturing, actually added workers, highlighting uneven impacts across the economy. The ADP report is based on payroll data from firms using ADP’s services, making it a useful real-time indicator but not a direct predictor of the government’s nonfarm payrolls report. The miss versus expectations and the first net decline in over two years made this release particularly significant for market analysts and policymakers.
The S&P 500 is up more than 4% for the year, posting a comeback in the second quarter after worries about President Donald Trump's tariff fights. The contraction in June was capped by payroll expansions in goods-producing roles, with an overall growth of 32,000 jobs.
The declining financial activity roles, with a loss of 14,000 jobs in June, might lead to concerns in the finance sector. The cooldown in the labor market, with employers showing hesitancy to hire and reluctance to replace departing workers, could potentially impact various business sectors, including trading and insurance.
