Private sector sheds 33,000 jobs in June as hiring slows

ROSELAND, N.J. - The U.S. private sector lost 33,000 jobs in June while annual pay growth held steady at 4.4% year-over-year, according to the ADP National Employment Report released Wednesday. The report comes from InvestingPro’s analysis of ADP, a prominent player in Professional Services with a market capitalization of $126 billion and currently trading above its Fair Value according to InvestingPro’s comprehensive analysis.

The job losses were led by professional and business services, which shed 56,000 positions, and education and health services, which lost 52,000 jobs. These declines were partially offset by gains in leisure and hospitality (32,000), manufacturing (15,000), and trade, transportation and utilities (14,000). Despite the employment fluctuations, ADP maintains impressive gross profit margins of 48.3% and has achieved revenue growth of 6.8% over the last twelve months.

Small businesses with fewer than 50 employees were hit hardest, cutting 47,000 jobs, while medium-sized companies lost 15,000 positions. Large employers with more than 500 workers added 30,000 jobs.

"Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month," said Dr. Nela Richardson, chief economist at ADP. "Still, the slowdown in hiring has yet to disrupt pay growth."

Pay growth for job-stayers remained relatively stable at 4.4% in June compared to 4.5% in May, while job-changers saw their wages increase by 6.8%, down slightly from 7.0% the previous month.

By region, the Midwest experienced the largest decline with 24,000 jobs lost, followed by the West with 20,000. The South was the only region to add jobs, with a gain of 13,000 positions.

The May employment figure was revised downward from an addition of 37,000 jobs to 29,000.

The ADP National Employment Report is based on anonymized payroll data from more than 25 million U.S. employees and provides a monthly snapshot of private-sector employment trends. For deeper insights into ADP’s financial performance and future outlook, InvestingPro offers exclusive access to 14+ additional ProTips and comprehensive analysis in the Pro Research Report, available for over 1,400 top US stocks.

In other recent news, Automatic Data Processing (ADP) presented its medium-term financial targets during its investor day, projecting revenue growth of 6-7% and earnings per share growth of 9-11%. These targets are slightly below previous projections but exceed consensus estimates for fiscal 2026/2027. The company continues to focus on global expansion and innovation, particularly through artificial intelligence and data capabilities. RBC Capital maintained a Sector Perform rating with a $315 price target, while Stifel reiterated a Hold rating with a $305 price target, both citing the company’s growth strategy. Mizuho raised its price target to $332, expressing optimism about ADP’s product improvements and execution. Conversely, UBS lowered its price target to $315, noting revised growth expectations and valuation concerns. Additionally, the ADP National Employment Report showed the U.S. private sector added 37,000 jobs in May, with annual pay rising by 4.5%. This employment data is based on payroll information from over 25 million U.S. employees.

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