U.S. private payrolls rise by 122,000, beating forecasts and underscoring labor market strength

[Financial News New York = Lee Byung-chul]Private-sector employment in the United States rose more than expected, once again confirming the labor market's resilience. Even as concerns about a slowdown in the economy have grown, companies continued hiring at a stronger pace than forecast, reinforcing expectations that the Federal Reserve System (Fed) will keep its benchmark interest rate unchanged for the time being.
ADP, a U.S. employment data provider, said on the 3rd local time that private-sector payrolls in the U.S. increased by 122,000 in May. That topped both the revised April figure of 105,000 and the 110,000 forecast compiled by Dow Jones.
The May increase was the largest since January last year. However, April's figure was revised down by 4,000 from the initial release.
Another notable point was that job growth, which had been concentrated in health care and medical services, spread to other industries. Of the 10 industries tracked by ADP, employment rose in eight, and hiring was relatively broad-based across company sizes and regions.
By sector, education and health services posted the largest gain, adding 57,000 jobs. Wholesale, transportation and utilities rose by 36,000, while professional and business services added 11,000. Construction and leisure and hospitality each increased employment by 8,000.
By contrast, information services lost 9,000 jobs. ADP suggested that productivity gains from the spread of artificial intelligence may have contributed to some declines in office jobs. Natural resources and mining also fell by 3,000.
By company size, small businesses with fewer than 50 employees led overall job growth by hiring 67,000 workers. Large companies with 500 or more employees added 40,000 jobs, while mid-sized firms hired 17,000.
Wage growth remained steady. Annual pay growth for workers who stayed in their jobs was unchanged from the previous month at 4.4%. For workers who changed jobs, wage growth eased slightly to 6.5%.
Nela Richardson, ADP's chief economist, said, "May's job gains were spread across a much wider range of industries than in recent years," and added, "The labor market is maintaining momentum as the summer hiring season approaches."
The data is drawing attention as an early indicator of the U.S. Department of Labor's May nonfarm payroll report, due out on the 6th. Wall Street currently expects nonfarm payrolls to rise by 80,000 in May, slowing from 115,000 in April, while the unemployment rate is seen holding steady at 4.3%.
Despite solid employment, markets expect the Fed to keep rates unchanged at the Federal Open Market Committee (FOMC) meeting on June 16-17 unless inflationary pressure picks up again. Interest-rate futures are currently pricing in an almost 100% chance that the Fed will hold rates steady.
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pride@fnnews.com Lee Byung-chul Reporter