Small businesses once again accounted for most of the private sector’s stronger-than-expected growth last month, according to a report from the payroll processing firm ADP, as further data points to a stable market despite a slowdown in total employment.
Earlier data pointed to a stable job market, even as total employment slowed.
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Private sector payrolls increased by 122,000 in May, ADP reported, up from April’s 105,000 added jobs and consensus analyst projections of 120,000, according to FactSet.
Companies with fewer than 50 employees added 67,000 new positions, those with 500 or more added 40,000 and medium-sized employers added 17,000.
Eight of the 10 sectors tracked by ADP added jobs last month as Nela Richardson, the firm’s chief economist, said hiring was more “broad-based than we’ve seen in the last few years” and the labor market “continues to show sustained momentum going into the summer hiring season.”
Education and health services added 57,000 jobs, the most among all sectors, while transportation and utilities added 36,000, professional and business services added 11,000 and construction and leisure and hospitality each rose by 8,000.
Information services lost 9,000 jobs, and natural resources and mining lost 3,000.
The Bureau of Labor Statistics reported Tuesday the U.S. had 7.62 million available positions, the most since March 2024 (8.2 million), with a vast majority of job openings coming from businesses with fewer than 10 employees. The rate at which people voluntarily exited their jobs each month dropped to 1.9%, the lowest since 2020.
ADP’s private-sector report precedes broader federal data the first week of each month. The Bureau of Labor Statistics will report May’s nonfarm jobs data and the unemployment rate for the month, with nonfarm payrolls expected to slow to an increase of 105,000 jobs, down from 115,000 in April, as the unemployment rate is projected to settle at 4.3%.
The last report on the U.S. job market signaled stabilized employment, but Federal Reserve officials pointed to a “low hire, low fire” labor environment. Data appeared to show companies reducing the number of employees they hired, while also lowering the number of workers they laid off. Total employment dropped to 162.6 million in April, the lowest total since December 2024, indicating employment growth of just 0.6%. That marked the fourth straight monthly decline for total employment, the longest such streak since 2009, as the labor participation rate—the percentage of Americans working or looking for work—fell to 61.8%, the lowest rate since 2021.
ForbesPrivate Employment Accelerated In April As Small Businesses Fuel Job Growth
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