US private-sector hiring failed to pick up as much as expected last month, according to new data that come amid a debate over whether the Federal Reserve will cut interest rates to help support the longest US economic expansion in history.

Private payrolls increased by 102,000 last month, from an upwardly revised 41,000 in May, according to ADP. However that was shy of economists’ expectations for 140,000 jobs, according to a survey of economists by Reuters.

Large companies, defined as those with 500 or more employees, led the way with 65,000 hires, while midsized companies were close behind with 60,000 jobs created. However, small businesses shed 23,000 jobs.

The report comes ahead of Friday’s official non-farm payrolls report, which includes private and public sector employment, and is expected to show hiring rebounded following a meagre 75,000 jobs in May.

Paul Ashworth, economist at Capital Economics, said the “muted” increase to private payrolls “suggests that the deterioration in the broader economy has now spread to the labour market”.

Labour market and other data have turned up soft adding to worries that Washington’s multi-fronted trade war is hurting business confidence. Indeed, data released by the Commerce Department on Wednesday showed the US trade gap ballooned to $55.5bn in May, from $51.2bn the previous month — and foreign trade could weigh on economic growth in the second quarter.

The Fed last month adopted a more dovish stance and pointed to possible interest rate cuts in the future citing rising “uncertainties” about the economic outlook. Fed chair Jay Powell has warned that risks to global growth have increased in recent weeks.

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Markets are betting the central bank will cut rates this year to support the longest US economic expansion since at least 1854.

A separate report from the labour department showed the number of Americans filing for unemployment benefits slipped last week to 221,000, compared with 229,000 the previous week.

Via Financial Times