"Did the U.S. economy really lose jobs in June for the first time since the pandemic? Payroll king ADP says yes, but investors ought to treat the report with a heavy dose of skepticism.
ADP on Wednesday said the private sector eliminated 33,000 jobs last month owing to lingering uncertainty caused by U.S. trade wars. The decline in employment was the first ADP has measured since March 2023.
ADP is best known as the company that helps other companies cut checks for employees. It calculates wages, taxes and deductions for 25 million American workers, giving ADP inside information on what’s happening in the labor market.
Could ADP foreshadow a decline in the government’s official jobs report on Thursday? If so, it would be the first negative reading since the pandemic in 2020.
Don’t take it to the bank.
The simple truth is that ADP is a poor predictor of the official U.S. jobs report produced by the U.S. Bureau of Economic Analysis. The two reports use different methods to measure the size of the workforce and how many jobs are created each month.
The result: They often diverge month to month, sometimes wildly so.
Take May. ADP reported a meager 29,000 increase in new jobs, but the BLS showed a much larger 139,000 gain. April also showed a similarly wide gap between the two reports.
Through the first five months of 2025, the difference between the two reports has averaged a whopping 63,000 a month.
ADP acknowledges its survey “is not intended to forecast the BLS non-farm payroll report.” In 2022, it gave up trying to do so after years of misses.
Given its checkered history, some forecasters, such as Pantheon Economics, say the ADP report is “useless.”
Other economists are more charitable. While they downplay ADP month to month, they point out the two job reports trend in the same direction over time.
What are they showing?
Both reports point to a slowdown in the U.S. labor market — companies are hiring fewer workers and it’s taking longer for people to find jobs.
The average increase in ADP private-sector jobs in the first six months of this year has slowed to 78,000 from 119,000 in the same span in 2024.
The BLS, for its part, shows the pace of job gains decelerating to 124,000 a month in 2025 from 179,000 in the same span a year earlier.
While both reports show hiring has tapered off, the BLS figures indicate the labor market is in better shape than the ADP estimates convey.
That’s why top officials at the Federal Reserve have put off cutting interest rates. They want to see how much U.S. tariffs raise inflation before acting, and they can afford to do so because they think the labor market is OK.
If the BLS reported a decline in employment in June, however, the Fed might have to rethink whether it should cut rates sooner rather than later.
“The other thing that would lead us to want to cut earlier is if we actually did see trouble in the labor market,” Fed Chair Jerome Powell told Congress last week.
The official employment report will give Wall Street more clarity.
“One of the reasons the Fed has been able to be patient before cutting rates was because the job market was holding up so well,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
“So if that were to change then the Fed may be forced to move earlier than they would like.”
Zurück
Chart analysieren
