US Private Employment Increases by 37,000…Lowest in Two Years

Corporate Hiring Slows Amid Uncertainty Over Trump’s Economic Policies

Job Switchers’ Wages Up 7%…Wage Growth Continues

Private sector job growth in the United States recorded its slowest pace in two years. Analysts say that uncertainty over President Donald Trump’s economic policies, combined with concerns about an economic slowdown, is casting a shadow over the entire labor market.

According to private payroll services firm ADP on the 4th, US private sector employment in May increased by just 37,000 compared to the previous month. This figure is far below market expectations of 111,000, marking the second consecutive month of lower-than-expected growth. It’s also being interpreted as a signal that the hiring momentum seen through last year is waning.

Nela Richardson, ADP’s chief economist, stated, "At the beginning of this year, the labor market was vibrant, but more recently, companies’ willingness to hire has noticeably weakened." Employment decreased in manufacturing, transportation, education, and healthcare, and both small and large companies cut their workforce. On the other hand, increases in hiring continued in leisure and hospitality and financial services.

Uncertainty triggered by changes in President Trump’s economic policies is also believed to be a factor. With companies unsure about the policy direction, they are postponing hiring decisions. The labor market slowdown is negatively affecting reemployment opportunities for the unemployed, and economists warn of a further cooling in hiring in the coming months.

ADP stated that despite the slowdown in job growth, wage increases are continuing. Workers who changed jobs saw an average wage increase of 7%, while those who stayed saw a 4.5% increase. Economist Richardson commented, "Regardless of the reduction in hiring, wage bargaining power in the labor market remains strong."

Following the release of the employment figures, New York Stock Exchange futures and US Treasury yields both declined. President Trump immediately ramped up pressure on Jerome Powell, Chair of the Federal Reserve (Fed), via Truth Social, stating that it was "time to lower rates." While the Fed has indicated it will not adjust rates immediately, it is closely watching the impact of trade policies and tariffs on inflation and the economic slowdown.

Meanwhile, the United States Department of Labor is scheduled to release the official May jobs report on the 7th. The market expects nonfarm payroll growth to slow from April and the unemployment rate to remain around 3.9%.

Lee Hye-in, Reporter hey@hankyung.com