Job market shows signs of slowing

Private employers added fewer jobs in May, data from the ADP Research Institute in collaboration with the Stanford Digital Economy Lab, a slower pace of hiring compared to the prior month in what economists say could be a sign of a slowdown in the labor market.

Companies hired 152,000 people last month, 40,000 less than in April. The biggest gains came from the service sectors, particularly in the trade, transport, utilities and financial services segments of the labor market. Meanwhile, medium-level companies with employees of between 50 to 499 workers added 79,000 jobs. Large businesses with at least 500 employees hired 98,000 people. Smaller-sized entities with 20 to 49 workers lost 36,000 jobs.

Manufacturing saw the largest losses in the month as it saw a decline of 20,000 jobs. The information sector lost 7,000 jobs while the professional and business services industry shed 6,000 roles. Meanwhile, the western part of the country was the only region that reported job losses of 10,000 with those declines coming particularly from the Pacific areas.

“Job gains and pay growth are slowing going into the second half of the year,” Nela Richardson, chief economist at ADP, said in a statement. “The labor market is solid, but we’re monitoring notable pockets of weakness tied to both producers and consumers.”

As job gains slowed, earnings also came in at a lower level last month than in April. Pay for employees who changed jobs was up 7.8 percent in May, less than the 9.3 percent reported in the prior month. Workers who stayed at their current jobs had pay stay at 5 percent with median annual earnings at about $58,000.

Economists point out that the labor market is still hiring but there are signs of slowness and workers are seemingly less willing to quit their jobs right now even as hiring continues and job openings are available for prospective workers. On Tuesday, government data showed that available jobs in the market dropped to a three-year low.

The unemployment rate is still low historically and has been under 4 percent for more than two years. Experts say after the convulsions of the pandemic and post-COVID years, the jobs market may be stabilizing to a dynamic where companies can find workers and employees can find jobs, though it may take a little longer than over the last couple of years.

“While the decline in job openings…suggests softening demand for workers, the increase in hires and quits implies quite the opposite—resilient demand and plentiful opportunity,” Julia Pollak, ZipRecruiter’s chief economist, said in a note on Tuesday. “Meanwhile, layoffs across the economy remained historically low, suggesting that workers continue to enjoy an unusual degree of job security.”