The U.S. private sector shed 33,000 jobs in June 2025, according to the latest data released by ADP on Tuesday.
This marks the first monthly decline in private employment since March 2023 and significantly deviates from economists’ forecasts, which had projected gains of up to 115,000 jobs.
The ADP National Employment Report highlights a shifting dynamic in the U.S. labor market, pointing to a broader slowdown in hiring activity rather than a surge in layoffs.
The job losses were primarily concentrated in professional and business services, which saw a reduction of 56,000 positions, followed by the education and health services sector, which lost 52,000 jobs.
On the flip side, certain industries showed modest growth. Leisure and hospitality added 32,000 jobs, while manufacturing contributed 15,000 new roles—offering some balance amid the broader employment dip.
ADP’s Chief Economist Nela Richardson noted, “The slowdown is evident in both hiring and wage growth. While the labor market remains tight in some sectors, overall activity is cooling.”
Small and medium-sized businesses bore the brunt of the job losses. Firms with fewer than 50 employees cut 47,000 jobs, and those with between 50 and 499 employees reduced their workforce by 15,000.
In contrast, large employers (500 or more workers) added 30,000 jobs, suggesting resilience in larger corporations.
Despite the decline in job numbers, wage growth remains steady. Annual pay rose 4.4% for job-stayers and 6.8% for job-changers, indicating ongoing competition for talent in some sectors.
Potential Policy Implications
The weaker-than-expected job report may prompt the Federal Reserve to reassess its monetary policy stance.
Market analysts are now pricing in a roughly 27% chance of a rate cut in July and fully expect a reduction by September.
The data arrives ahead of the Bureau of Labor Statistics’ official jobs report, due later this week, which will offer further insight into the state of the broader economy.
“This is the clearest signal yet that the labor market may be losing momentum,” said Danielle Martin, an analyst at Keystone Economics. “The Fed will likely take a more dovish tone going forward.”
Looking Ahead
While one month of data does not establish a trend, the June figures serve as a cautionary signal for policymakers and businesses alike.
The next few months will be critical in determining whether this contraction is an anomaly or the beginning of a broader slowdown in the U.S. labor market.
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