Tara Skipper, talent acquisition partner talks to persecutive job applicants at the USC booth during the Veterans Employment Fair held at the Carson Civic Center in Carson on Wednesday, June 26, 2019.
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Job creation looks to have had another rough month in June, with private companies adding just 102,000 new positions, according to a report Wednesday from ADP and Moody’s Analytics.
That missed even the meager 135,000 estimate from economists surveyed by Dow Jones and comes off the weak May growth of just 41,000. The May number was revised up from an initially reported 27,000.
The disappointment sets the stage for another possible letdown from the more widely watched nonfarm payrolls report from the Labor Department, which will be released Friday and is expected to show growth of 165,000 after May’s lackluster 75,000.
“The economy’s growth rate is significantly slowing, and I think the risks are rising that it’s going to stall out,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC. “I think the economy is on the razor’s edge, and this number is consistent with that view.”
Economic data overall has been wobbly lately as economists see growth slowing in 2019 and a possible recession ahead in 2020.
“The job market continues to throttle back,” Zandi said in a statement. “Job growth has slowed sharply in recent months, as businesses have turned more cautious in their hiring. Small businesses are the most nervous, especially in the construction sector and at bricks-and-mortar retailers.”
Small companies take a hit
Indeed, companies with fewer than 50,000 employees saw another setback in June, with payrolls falling by 23,000 after a decline of 52,000 the previous month. Businesses with fewer than 20 employees were particularly hard-hit, subtracting 37,000 jobs.
On the upside, job creation was fairly strong among bigger businesses. Companies with 50 to 499 employees posted growth of 60,000, while large businesses added 65,000.
At the industry level, goods producers on net lost 15,000 jobs. Construction fell by 18,000 while natural resources and mining lost 4,000. Manufacturing added 7,000.
Service-related industries provided all the job growth, adding 117,000 positions. Education and health services led the way with 55,000 and professional and business services contributed 32,000 to the total. Trade, transportation and utilities added 23,000 though leisure and hospitality rose by just 3,000 after adding 16,000 in May. Franchises grew by 13,500.
“While large businesses continue to do well, small businesses are struggling as they compete with the ongoing tight labor market,” added Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The goods producing sector continues to show weakness. Among services, leisure and hospitality’s weakness could be a reflection of consumer confidence.”
The Conference Board’s measure of consumer sentiment in June fell to its lowest level in nearly two years as worries intensify over tariffs and expectations dim for job growth.
Despite the slowdown in hiring, there remain 1.6 million more jobs than workers counted among the unemployed, a record high. The tight labor market has produced only a modest boost in wages, however.
As worries over the economy grow, markets are expecting a policy response from the Federal Reserve. Wall Street expects the central bank to cut interest rates at its meeting later this month, though Fed officials remain mostly noncommittal.