The private sector job market in the United States experienced a significant boost in June, with an increase of 497,000 jobs, according to the ADP National Employment Report. This report, produced by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab, provides valuable insights into the current state of the labor market based on fine-grained anonymized and aggregated payroll data from over 25 million U.S. employees.
One of the key highlights of the report is the substantial growth in consumer-facing service industries, which played a significant role in driving job creation beyond expectations. Sectors such as leisure and hospitality, trade and transportation, and education and health services showed robust gains. However, it’s important to note that the market exhibited fragmentation, with manufacturing, information, and finance experiencing declines.
An impressive gain in June
The change in U.S. private employment for June stood at an impressive 497,000 jobs. This growth can be further broken down by industry sector. The goods-producing sector saw an increase of 124,000 jobs, with gains in natural resources/mining (69,000 jobs) and construction (97,000 jobs). However, manufacturing experienced a decline of 42,000 jobs. On the other hand, the service-providing sector added 373,000 jobs, with notable increases in trade/transportation/utilities (90,000 jobs), education/health services (74,000 jobs), and leisure/hospitality (232,000 jobs).
When analyzing the change by U.S. regions, the Northeast led the way with an increase of 250,000 jobs. This growth was driven by gains in both New England (77,000 jobs) and the Middle Atlantic (173,000 jobs). The Midwest also experienced significant job creation, adding 162,000 jobs. The East North Central (83,000 jobs) and West North Central (79,000 jobs) regions contributed to this growth. However, the South saw a slight decrease of 10,000 jobs, primarily due to declines in the South Atlantic (10,000 jobs), East South Central (-12,000 jobs), and West South Central (-8,000 jobs) regions. The West region added 83,000 jobs, with the Pacific (80,000 jobs) leading the way.
Examining employment change by establishment size, small establishments made the largest contribution, adding 299,000 jobs. Within this category, establishments with 1-19 employees added 162,000 jobs, while those with 20-49 employees contributed 137,000 jobs. Medium establishments added 183,000 jobs, with 50-249 employee establishments accounting for 171,000 jobs and 250-499 employee establishments adding 12,000 jobs. Large establishments, however, experienced a decrease of 8,000 jobs, with those employing 500 or more individuals being the main contributors to this decline.
Pay insights revealed in the Employment Report
In terms of pay insights, the report revealed that pay gains in June experienced a slowdown. Job stayers, referring to individuals who remain in the same job, witnessed a year-over-year pay increase of 6.4 percent. Although this is still a positive growth rate, it represents a decrease from the 6.6 percent increase recorded in May. Meanwhile, for job changers, pay gains continued to slow for the 12th consecutive month, reaching 11.2 percent. This marks the slowest pace of growth since October 2021.
The median change in annual pay for job stayers across different industry sectors showed variations. Within the goods-producing sector, natural resources/mining (6.4 percent), construction (6.7 percent), and manufacturing (5.9 percent) experienced different levels of pay growth. Among service-providing sectors, trade/transportation/utilities (6.3 percent), information (5.9 percent), financial activities (6.7 percent), professional/business services (6.2 percent), education/health services (6.9 percent), leisure/hospitality (7.9 percent), and other services (6.3 percent) demonstrated varying levels of pay increases.
Analyzing pay changes based on firm size, small firms with 1-19 employees witnessed a median change in annual pay of 5.4 percent. Small firms with 20-49 employees experienced a higher growth rate of 6.5 percent. Among medium firms, those with 50-249 employees had a median change in annual pay of 6.7 percent, while firms with 250-499 employees saw a growth rate of 6.6 percent. Large firms employing 500 or more individuals had a median change in annual pay of 6.5 percent.
The ADP Research Institute
The ADP Research Institute aims to deliver data-driven discoveries about the world of work and derive reliable economic indicators from these insights. By providing actionable insights to the economy at large, they contribute to making the world of work better and more productive.
Although the June ADP National Employment Report showcased positive growth in private sector employment and a year-over-year increase in pay, it also indicated some areas of concern, such as wage growth slowing down and declines in certain industries and regions. It will be essential to monitor future employment reports to gauge the resilience and sustainability of the job market’s recovery.