Private employers added just 102,000 jobs to their payrolls in June, according to the latest ADP National Employment Report — missing analyst expectations of 140,000 on the heels of a week month for job creation.
Most hiring took place in the service-providing sector, with 117,000 jobs created. Manufacturing also rebounded slightly from the previous month — which saw only 27,000 jobs added — with 7,000 new jobs created.
“The job market continues to throttle back. Job growth has slowed sharply in recent months, as businesses have turned more cautious in their hiring,” said Mark Zandi, the chief economist of Moody’s Analytics. “Small businesses are the most nervous, especially in the construction sector and at bricks-and-mortar retailers.”
During a call with reporters, Zandi warned that small businesses are bearing the brunt of a tight labor market and concerns of slowing global growth — and suggested that the unemployment could rise during the month of June.
“I do think a slowdown we’re observing now is more pronounced than anticipated,” Zandi said. “Growth, broadly, is below the economy’s potential growth, which means if we stay here, that unemployment will begin to notch higher.”
The report precedes the release on Friday of the Labor Department’s jobs report, during which the U.S. economy is expected to have added 160,000 new jobs. Analysts anticipated the unemployment rate to remain at 3.6 percent, a decades-low. In May, the U.S. added a less-than-expected 75,000 jobs.
If job creation remains stagnant — and unemployment inches upward — that could provide enough fodder to the Federal Reserve to lower interest rates during its July policy-setting meeting. In June, policymakers at the central bank hinted at the possibility of a rate cut if growth continued to slow.