Private sector employers added 278,000 jobs in May, while annual pay increased 6.5%, according to payroll provider ADP, although some sectors saw employment declines, including professional and business services and large companies.
The service-providing sector added 168,000 jobs in May, according to the ADP National Employment Report, including 208,000 in leisure and hospitality and 32,000 in trade, transportation and utilities. However, professional and business services such as accounting and tax preparation lost 5,000 jobs in May, while the financial activities sector subtracted 35,000 jobs, the information sector lost 15,000 jobs, and education and health services lost 29,000 jobs.
"These trends reflect the shifts in consumer spending, where we saw consumers spending more on goods early on during the pandemic and through 2021, and that shift into services is being reflected in hiring," said ADP chief economist Nela Richardson during a press conference Thursday. "You also saw some weakness, though, in services, so it's not across the board. Financial activities, professional and business services, information, and education and health services all lost headcount last month, according to ADP's private sector data. The second trend that we're identifying is that these numbers are strong, they're fragmented, and they're driven by small firms. We saw in the data a pullback in hiring by larger firms. Remember, they hired aggressively last year and they're starting to pull back."
The goods-producing sector added 110,000 jobs, including 94,000 in natural resources and mining, and 64,000 in construction, offset by a loss of 48,000 in manufacturing.
Small establishments added 235,000 jobs in May, including 116,000 at businesses with between one and 19 employees and 119,000 at companies with between 20 and 49 employees. Medium-size establishments added 140,000 jobs in May, including 112,000 at businesses with between 50 and 249 employees and 28,000 at companies with between 250 and 499 employees. Large businesses with 500 employees or more lost 106,000 jobs.
There was a broad-based slowdown in pay increases in May, with job changers seeing a gain of 12.1%, down a full percentage point from April. For job stayers, the increase was 6.5% in May, down from 6.7%. In the professional and business services sector, the figure for job stayers was 6.2%.
