US Private Payrolls Post Biggest Gain Since January 2025: ADP

The private sector continues driving employment gains in the United States, posting the largest job growth in more than a year.

Private employers added 122,000 new jobs in May—the highest since January 2025—according to new data from payroll processor ADP released on June 3.

This is slightly down from the previous month’s revised 105,000.

Last month’s reading came in above the consensus estimate of 117,000.

“Hiring was more broad-based in May than we’ve seen in the last few years. The labor market continues to show sustained momentum going into the summer hiring season,” Nela Richardson, chief economist at ADP, said in a statement.

Job gains were led by education and health services—an ongoing pattern for the past year—with 57,000 positions.

Trade, transportation, and utilities also expanded payrolls by 36,000. Professional and business services added 11,000 positions.

The information sector and the natural resources and mining industry erased 9,000 and 3,000 jobs, respectively.

Payroll growth was also observed across businesses of all sizes. Smaller firms—those with one to 49 employees—posted the most, at 67,000.

This comes after the Bureau of Labor Statistics reported that job openings surged to a higher-than-expected 7.618 million, the highest since November 2024.

Multiple data sources suggest that the U.S. labor market is warming up heading into the summer as employers shrug off a series of headwinds, from renewed inflationary pressures to the war in Iran.

“The collective message from recent job market data is that U.S. employment is growing modestly, but nevertheless at a faster pace than that of jobseekers,” Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, said in a note emailed to The Epoch Times.

But he noted that April’s solid data could be “noise rather than signal.”

“One reason is that big swings in sector-level job postings are often reversed in subsequent releases,” Adams said. “Another is that the best cross-check of the BLS job openings report, which is produced by the job posting website Indeed, doesn’t show a similar pickup in recent months.”

Since the recent March peak, Indeed job postings have struggled to rebound and maintain momentum.

Economists will get a more detailed look at employment conditions when the Bureau of Labor Statistics publishes the highly anticipated May jobs report.

The economy is expected to have created 85,000 jobs last month, and the unemployment rate is likely to have held steady at 4.3 percent.

If accurate, the reading would keep pace with this year’s employment figures and be better than in 2025. Additionally, it would exceed the estimated breakeven rate—the number of jobs necessary to keep the unemployment rate low—which is close to zero.

Inflation and Wages

Private-sector wage growth was little changed in May, according to ADP.

Pay growth for job-stayers was flat at 4.4 percent year over year. The pace of wage gains for job-changers eased slightly to 6.5 percent, from 6.6 percent in April.

Market watchers will be watching the wage data “closely,” said Mark Hamrick, senior economic analyst at Bankrate.

“With workers opting to stick with their current roles and employers keeping a tight leash on new hiring, how consumers manage the rising cost of living will be largely dictated by whether these wages can keep pace,” Hamrick told The Epoch Times in an emailed note.

As the ongoing war in Iran drives up headline inflation—primarily energy costs—workers’ real earnings have taken a hit.

Real (inflation-adjusted) average hourly earnings fell by 0.5 percent in April, while real average weekly earnings also dipped by 0.2 percent, the bureau reported last month.

This is the first time in three years that inflation outstripped wage growth.

So far, consumers are still opening their wallets.

Excluding automobiles and gasoline, retail sales still jumped by 0.5 percent in April. Economists expect similar data for May, attributing persistent spending habits to a solid labor market.

“If the Iran War’s impact on the U.S. economy remains limited, job growth will likely continue to outpace growth of labor supply in the second half of the year, tightening the labor market,” Adams said.