Private sector employers cut 33,000 jobs in June, the first decline in over two years, while annual pay grew 4.4% year-over-year, payroll giant ADP reported Wednesday.
The professional and business services sector, which includes accounting and tax preparation, lost 56,000 jobs in June, while the financial activities sector, which includes banking, dropped 14,000 jobs. Education and health services lost 52,000 jobs. However, there were gains in other sectors, such as leisure and hospitality, which added 32,000 jobs. Manufacturing gained 15,000 jobs, the construction industry added 9,000 jobs, and the natural resources and mining sector added 8,000 jobs. The overall goods-producing sector added 33,000 jobs, but the overall service-providing sector lost 66,000 jobs in June.
This is the first time since March 2023 under ADP’s relaunched method of estimating job gains that it has seen a job loss for the month.
“While rare, it actually does follow the trend we’ve been seeing since January, which is a steady decline in hiring momentum,” said ADP chief economist Nela Richardson during a conference call Wednesday with reporters. “We’ve seen that trend for the last four straight months. To be specific, there was an aberration of a bit of a hiring surge in the first quarter, but overall, except for that outlier month, a steady decline in job gains.”
Small businesses lost 47,000 jobs, including 29,000 in businesses with between one and 19 employees, and 18,000 at companies with between 20 and 49 employees. Medium-size establishments with between 50 and 249 employees added 12,000 jobs, but those with 250 and 499 employees lost 27,000 jobs. Large establishments with 500 employees or more added 30,000 jobs.
Year-over-year pay growth for employees who stayed at their jobs changed only a little bit in June at 4.4%, compared to 4.5% in May. Pay growth for job-changers was 6.8% in June, down slightly from 7.0% in May. In professional and business services, the rate of pay growth for job stayers was 4.2%.
Accounting Today asked about the losses in the professional and business services sectors and whether they were related to accounting or related jobs.
“We didn’t break this out by different job titles, but we did break it out into administrative support roles and professional services roles, more technical roles according to the NAICS classification,” Richardson replied. “What I can tell you is that across the board, we saw declines. There were times during the pandemic where we saw big losses in administrative support as more firms were shifting to virtual, remote and hybrid, so you didn’t need so many support services. This is not that. The consistency between more professional roles and more support roles in terms of losses is there in the data.”
For accounting specifically, she noted that supply is an issue. “Accounting is one of those fields where if you don’t see a lot of hiring, it might be because there’s not a lot of people to hire,” said Richardson. “I would put accounting and construction in terms of specialty trades throughout the labor market in that bucket. So we have two things happening at once: softening demand in terms of hiring hesitancy and a reluctance to replace, but we also have pockets of shortages in certain job titles and certain job sectors, which makes this labor market more complicated to discern than it has been historically.”
