“Not only are factories not coming back to America, the existing companies in the country are not churning out new jobs,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in a note to investors on Wednesday. “If this number is to be believed the Trump economics team is going to have to find a new way to boost economic growth as the economy is clearly slowing and a slowing economy does not make business run out and hire a lot of new people to help them sell and produce goods and services.”
The nation’s private employers added 27,000 jobs in May, the lowest monthly number since March 2010, and a far cry from the 100,000 to 250,000 range forecast by analysts. The report also is jarring in contrast with April’s, which recorded a private-sector gain of 271,000 jobs.
The ADP numbers do not bode well for the U.S. jobs report, which tallies private- and public-sector employment, that the Labor Department will release Friday. In his note, Rupkey said that he was lowering his estimates for the Labor Department report from 200,000 to 120,000 because of the grim picture painted by ADP.
The employment climate is unlikely to brighten anytime soon, as companies that were struggling to shield themselves from the impact of Trump’s 25 percent tariffs on $250 billion in Chinese imports are also facing the prospect of new tariffs on Mexican goods. Trump has said those penalties will start June 10 at 5 percent and escalate monthly, to as much as 25 percent, unless Mexico cuts off the flow of Central American migrants across their shared border.
The report, which is released jointly with Moody’s Analytics, also noted that small businesses (those with fewer than 50 employees) shed 52,000 jobs in May — the biggest loss in nine years. Franchises lost 4,800.
“Job growth is moderating,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement. Moody’s produces the figures with ADP. “Labor shortages are impeding job growth, particularly at small companies, and layoffs at brick-and-mortar retailers are hurting.”