DB Investing

Category: US Labor Market

  • Breaking: Initial Employment Report Signals Weakness in U.S. Labor Market

    Breaking: Initial Employment Report Signals Weakness in U.S. Labor Market

    Private Sector Jobs Decline Unexpectedly in June

    Private sector employment in the United States fell by 33,000 jobs in June, significantly missing expectations of a 99,000 increase. This sharp miss highlights employer caution and worker reluctance to switch jobs amid growing uncertainty linked to US tariffs.

    Revised May Figures

    May’s employment data was also revised down to 29,000 jobs added, from the previously reported 37,000 — the smallest increase since March 2023.

    Sector Performance

    The ADP report, released on Wednesday, showed that the losses were concentrated in:

    • Professional and business services: down 56,000 jobs
    • Education and healthcare: down 52,000 jobs
    • Financial activities: down 14,000 jobs

    On the positive side, gains in leisure, hospitality, manufacturing, and mining helped limit the overall decline:

    • Goods-producing industries added 32,000 jobs
    • Total service-sector jobs fell by 66,000 jobs

    Wage Growth Trends

    Despite the hiring slowdown, layoffs remain rare, according to ADP Chief Economist Nela Richardson.
    She emphasized that the cooling in employment has not yet disrupted wage growth.

    Annual wage increases for workers staying in their current jobs remained steady. Job switchers saw a wage growth of 6.8% in June, slightly lower than the previous 7%.

    Broader Labor Market Outlook

    ADP’s figures typically don’t directly align with the official Non-Farm Payrolls (NFP) report, which is more closely watched by markets and is due Thursday.
    Economists project the NFP report to show an addition of 110,000 to 120,000 jobs in June, with unemployment potentially rising to 4.3% from 4.2%.

    Weekly jobless claims are also set to be released Thursday, expected to reach 240,000 new applications.
    This data comes in a shortened trading week due to the US Independence Day holiday on July 4, with markets closing early on Thursday and fully closed on Friday.

    Federal Reserve’s Approach

    The Federal Reserve continues to focus on maximum employment and inflation control.
    Chair Jerome Powell reiterated a wait-and-see stance on future interest rate changes, waiting for more clarity on the broader economic impact of the tariffs.
    While Powell did not dismiss the possibility of a rate cut this year, he emphasized the need for patience.

    📌 Conclusion

    The unexpected drop in private sector jobs signals potential weaknesses in the US labor market, although wage growth remains stable.
    All eyes now turn to Thursday’s official jobs report for confirmation of whether this is a short-term hiccup or a deeper labor market shift.

  • US Unemployment Claims Drop Unexpectedly

    US Unemployment Claims Drop Unexpectedly

    Signs of a Slowing Labor Market?

    Organized English Translation: 

    Fewer Americans Filed for Unemployment Benefits Last Week 
    The number of Americans applying for new unemployment benefits dropped more than expected last week, indicating continued historically low levels. 

    According to the U.S. Department of Labor on Wednesday, initial unemployment claims fell by 5,000 to a seasonally adjusted 245,000 for the week ending June 14. Economists had expected 246,000. 

    Despite this small drop, the four-week moving average, which smooths out weekly volatility, rose to 245,500—the highest level since August 2023. 

    Meanwhile, the number of Americans receiving continued unemployment benefits for the week ending June 7 decreased slightly to 1.95 million. 

    Claims Remain Within a Healthy Range Despite Slowdown 

    Weekly unemployment claims serve as a proxy for layoffs. Since the sharp COVID-19 recession in 2020, claims have largely remained in the healthy range of 200,000 to 250,000. However, recent data shows claims lingering near the upper end of that range—signaling a possible cooling of the labor market. 

    So far in 2025, employers have added an average of 124,000 jobs per month, lower than in recent years: 

    • 2023: 168,000 per month 
    • 2021–2022: Around 400,000 per month 

    As the Federal Reserve concludes its two-day meeting today (Wednesday), analysts expect no change in interest rates, with policymakers closely watching inflation and labor dynamics. 

    Conclusion: 

    While unemployment claims remain within acceptable levels, rising averages and slower job growth suggest a gradual softening in the labor market—a trend that could influence future monetary policy decisions.