Hiring momentum is ‘starting to slow,’ ADP economist says

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Hiring momentum is ‘starting to slow,’ ADP economist says

00:00 Speaker A

The pace of hiring in May reached its lowest level since March of 2023, according to new data out from ADP. Private employers added just 37,000 jobs during the month, below economists expectations of 114,000. Here to react to the report, we’ve got Nela Richardson, who is the ADP chief economist. Great to speak with you once again, Nela. Just take us into your reaction. What took place within this most recent month, and how much of this is tied back to tepidness and hiring stemming from some of the tariff uncertainty right now?

01:04 Nela Richardson

Nice to see you again, Brad. You know, we saw some hiring momentum in the early part of 2025, and that momentum is starting to slow. So when I look at this particular report and what’s driving the numbers, the first place to stop is the goods sector. The goods sector overall was weak. Manufacturing that had seen a burst of hiring in February and March, shed jobs in May, and that’s consistent with the manufacturers surveys that we’ve seen. They’ve been downbeat and pointing to contraction after showing some signs of earlier optimism. I also point to the construction numbers that are lower than we’re used to seeing, and so that is a place of weakness. And then when I turn over to the services side and we got the new data from ISM on the services index showing a bit of a downbeat

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for service providers even, you see that for professional business services, those B2B businesses, they lost jobs as well. Within all of this, there was some places of strength, and one to highlight is leisure and hospitality. That’s a consumer focused sector. So if the consumers are doing well, and they’re spending on an entertainment, that’s good sign. And I know there’s a lot of data here, Brad, but one other important point is that the smallest businesses lost the most jobs. So when you talk about uncertainty and the fog that’s kind of on the

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for now, it’s really small businesses that are having the most trouble navigating it in terms of their hiring.

03:13 Speaker A

Would love to get your read through on some of the pay, the pay, the worker pay and some of the move that we saw there because as we’re taking a look at the median change in annual pay, it still paid more to be a job changer than a job stayer, job stayers seeing a rise of 4 and a half percent versus job changers seeing 7%.

03:55 Nela Richardson

Exactly. Those are robust pay levels. We’ll take those all day long, even as workers will take those all day long to get a bump in pay that is typical of 7% from just changing jobs. Historically is quite robust. And so that tells you two things. One, even though the hiring momentum is slowing, it’s not necessarily slowing because of lack of demand. It’s slowing maybe because of this hesitancy. And the other thing it tells you is that this is still a relatively tight labor market. This is still a labor market where the workers who are most sensitive to local labor market conditions and real time conditions, those job switchers are still seeing outside pay gains. And so overall this is a soft spot, two months of a soft spot, but in the context of a broader, more resilient labor market.

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#Hiring #momentum #starting #slow #ADP #economist

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