Private sector job growth fell short of expectations in June, with companies adding 98,000 positions as hiring remained concentrated in a handful of sectors, according to data released Wednesday by payroll processor ADP.
The June figure represents a decline from May’s unrevised 122,000 additions and came in below the consensus forecast of 110,000. The slowdown underscores mounting concerns about the trajectory of the labor market as both supply and demand dynamics shift.
Healthcare Drives Nearly Half of Job Gains
Education and health services accounted for 48,000 of June’s new positions, continuing the sector’s dominance in recent employment reports. The services sector more broadly drove the gains, contributing all but 2,000 of the month’s job additions.
Other sectors showing modest growth included trade, transportation and utilities with 15,000 positions, financial activities with 14,000, and other services with 8,000. Natural resources and mining shed 5,000 jobs, making it the only sector to post losses.
Notably weak was leisure and hospitality, which added just 2,000 positions. The underwhelming performance in this consumer-facing industry extends a pattern that has persisted throughout the year, raising questions about underlying consumer demand.
Labor Market Tensions Emerge
Nela Richardson, ADP’s chief economist, pointed to competing forces shaping the employment landscape. “The pace of hiring is telling a story of both supply and demand,” Richardson said. “We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries. For now, the overall effect is a slowdown in job creation.”
Wage growth showed persistence, with workers who remained in their positions seeing annual pay increases of 4.4%. Job switchers fared better, commanding 6.6% higher pay compared to a year earlier.
Small Businesses Lead Hiring
The report revealed a tilt toward smaller employers in June’s job creation. Companies with fewer than 50 employees added 53,000 positions, outpacing larger firms. Midsize companies with 50 to 499 employees contributed 29,000 jobs, while establishments with 500 or more workers added 25,000.
Government Report on Deck
The ADP data arrives ahead of Thursday’s official employment report from the Bureau of Labor Statistics, which economists typically view as the definitive measure of labor market health. In recent months, ADP’s figures have generally come in below the government’s count, which has shown more resilient job creation this year.
Wall Street forecasters expect the BLS report to show nonfarm payrolls rising by 115,000 in June, with the unemployment rate holding steady at 4.3%. Average hourly earnings are projected to increase 0.3% for the month and 3.5% year-over-year.
The divergence between private sector hiring patterns and broader economic indicators will be closely watched by Federal Reserve officials as they assess the balance between labor market strength and inflation pressures in the months ahead.
Source: www.cnbc.com — https://www.cnbc.com/2026/07/01/private-payrolls-rose-by-98000-in-june-less-than-expected-adp-reports.html
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