A day after a private sector jobs report found unusual strength in the U.S. labor market, the Department of Labor issued a report appearing to show labor market weakness.
The Labor Department reported June nonfarm payrolls increased by 209,000 jobs from the previous month. The increase was the smallest monthly jobs increase since December 2020. The unemployment rate fell 0.1% to 3.6%.
On Thursday, payroll processing firm ADP reported private sector jobs surged by 497,000 in June, much stronger than the 267,000 gain in May and more than twice analysts’ estimates.
Market watchers were left scratching their heads at the divergence between the reports.
“A 209,000 increase in payrolls can hardly be described as weak,” said Seema Shah, chief global strategist at Principal Asset Management. “But after yesterday’s ADP wrongfooted investors into expecting another bumper jobs number, the market may be disappointed.”
Friday’s monthly jobs report found wages still rising, up 0.4% from the previous month and up 4.4% from June 2022.
Thursday’s ADP report found annual private sector pay rising 6.4% from June 2022.
Nela Richardson, chief economist at ADP, said: “Consumer-facing service industries had a strong June, aligning to push job creation higher than expected, but wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”
Another report Thursday found job openings decreasing in May. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) found job listings down 496,000 from April levels. Openings outnumbered the available labor pool by 1.6 to 1 for the month, a level that had been closer to 2 to 1 just a few months ago.
The JOLTS report showed a rise in the level of quits level, often an indication of a tight labor market, as workers feel confident quitting their current jobs for better opportunities. Quits increased by 250,000 in May, taking the quits rate up to 2.6%, a 0.2% increase.
