Yields Surge After ADP Report 497K Jobs Added in June, Led by Small and Medium Businesses

The strength of the US labor market continues to astound analyst’s, private payroll company ADP reported that US private sector jobs grew by 497,000 (consensus 228,000). It was the largest increase since Feb 2022 following a downwardly revised 267,000 (from 278,000) in May. The data briefly lifting the 2-yr yield past its high from early March +12 bps to 5.08% and to a level not seen since before the Global Financial Crisis and the US dollar rose across the board. Jobs in the goods-producing sector increased by 124,000 while jobs in the service-providing sector surged by 373,000. The fallout from the financial industry and technology layoffs pressured by rising interest rates and elevated inflation appears to have levelled off. The US Labor Department will report its jobs report on Friday.

Small and medium businesses led the hiring, registering gains of 299,000 and 183,000, respectively, versus a decline of 8,000 positions at large establishments with pay gains slowing rapidly and fewer people switching jobs. Separate data from Challenger, Gray & Christmas Inc. showed the pace of job cuts by US employers slowed in June.


ADP US National Employment June 2023

  • June ADP national employment +497K vs +228K expected
  • Largest since Feb 2022
  • Prior month revised +278K (revised to +267K)
  • Small (less than 50 employees) +299K vs +116K prior
  • Medium firms (500 – 499) +183K vs +112K prior
  • Large (greater than 499 employees) -8K vs +106K prior
  • The services sector added 373K jobs, led by leisure/hospitality (232K), education/health services (74K), trade/transportation/utilities (90K), while information shed 30K jobs.
  • The goods-producing industry added 124K jobs due to construction (97K) and mining (69K) while manufacturing shed 42K jobs.
  • Job stayers 6.6% vs 6.4%
  • Job stayers, pay growth eased to 6.7% from 6.9%
  • Job changers 11.2% vs 12.1% last month
  • Job stayers saw a year-over-year pay increase of 6.4 percent, down from 6.6 percent in May. For job changers, pay gains slowed for the 12th straight month, to 11.2 percent, the slowest pace of growth since October 2021.

Total U.S. Nonfarm Private Employment: 497,000

United States ADP Employment Change
United States ADP Employment Change

By Company Size

Small establishments: +299,000
o 1-19 employees +162,000
o 20-49 employees +137,000
 Medium establishments: +183,000
o 50-249 employees +171,000
o 250-499 employees +12,000
 Large establishments: -8,000
o 500+ employees -8,000

The slowdown in pay growth gives the clearest signal of what’s going on in the labor market right now. Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs.”

Nela Richardson Chief Economist, ADP

Change by Industry Sector

 Goods-producing: 124,000
o Natural resources/mining 69,000
o Construction 97,000
o Manufacturing -42,000

 Service-providing: 373,000
o Trade/transportation/utilities 90,000
o Information -30,000
o Financial activities -16,000
o Professional/business services -5,000
o Education/health services 74,000
o Leisure/hospitality 232,000
o Other services 28,000


Pay gains slowed again in June
Job stayers saw a year-over-year pay increase of 6.4 percent, down from 6.6 percent in May. For job
changers, pay gains slowed for the 12th straight month, to 11.2 percent, the slowest pace of growth since
October 2021.

Median Change in Annual Pay (ADP matched person sample)
 Job-Stayers 6.4%
 Job-Changers 11.2%

The ADP count comes two days ahead of the government’s nonfarm payrolls report, which includes government jobs that ADP does not count.

The Fed Chair Powell came out with less hawkish tone as expected at the last FOMC with the banking crisis fallout. Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. The wages data gives us indications of the FOMC plans on rates into 2023.

Estimates for BLS report

The Labor Department is set to release its June jobs report Friday at 8:30 a.m. ET. Here are the main metrics expected:

  • June Nonfarm Payrolls (consensus 225K (range +110K to +288K); prior 339,000),
  • Nonfarm Private Payrolls (consensus +200K; prior 283,000),
  • Unemployment Rate (consensus 3.6%; prior 3.7%),
  • Average Workweek (consensus 34.3; prior 34.3),
  • Average Hourly Earnings m/m (consensus 0.3%; prior 0.3%);
  • Average Hourly Earnings y/y (consensus 4.2%; prior 4.3%);

About the ADP® National Employment Report™

The ADP® National Employment Report™ is a monthly measure of the change in total U.S. nonfarm private employment derived from actual, anonymous payroll data of client companies served by ADP®, a leading provider of human capital management solutions. The report, which measures nearly 26 million U.S. workers, is produced by the ADP Research Institute®, a specialized group within the company that provides insights around employment trends and workforce strategy, in collaboration with Moody’s Analytics, Inc.

Each month, ADP Research Institute issues the ADP National Employment Report as part of the company’s commitment to adding deeper insights into the U.S. labor market and providing businesses, governments and others with a source of credible and valuable information. The ADP National Employment Report is broadly distributed to the public each month, free of charge.

The data for this report is collected for pay periods that can be interpolated to include the week of the 12th of each month and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments. Due to this processing, this subset is modified to make it indicative of national employment levels; therefore, the resulting employment changes computed for the ADP National Employment Report are not representative of changes in ADP’s total base of U.S. business clients.

Source: ADP, TradersCommunity Data, BLS

From The TradersCommunity News Desk