ADP Jobs Shock: Private Sector Sheds 33,000 Jobs in June, First Drop Since 2010 (Sans Covid)

The June 2025 ADP National Employment Report delivered a stunning downside surprise as U.S. private sector employment contracted by 33,000 jobs, marking the first outright job loss since the pandemic lows of 2020 and, outside of COVID-related volatility, the first negative ADP print since June 2010. This significant miss against consensus expectations for a 111,000 gain underscores a dramatic softening in labor market momentum and raises fresh questions about the resilience of private-sector hiring.

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The losses were concentrated in the services sector, which shed 66,000 jobs overall. The steepest declines occurred in professional and business services (-56,000) and education and health services (-52,000). These two categories alone accounted for nearly all the headline job losses. Financial activities also posted a decline of 14,000 jobs. By contrast, the leisure and hospitality sector added 32,000 jobs, along with gains in trade/transportation/utilities (+14,000), information (+5,000), and other services (+5,000). Despite those pockets of strength, the broader services sector clearly turned negative for the month.

On the flip side, goods-producing industries added 32,000 jobs in June. Manufacturing led the way with a 15,000-job increase, while construction and natural resources/mining added 9,000 and 8,000 jobs, respectively. These gains suggest ongoing industrial resilience, even as demand for services cools more sharply.

By company size, small and mid-sized businesses struggled most. Small establishments (1–49 employees) lost a combined 47,000 jobs, with the smallest firms (under 20 employees) accounting for 29,000 of those losses. Mid-sized businesses (50–499 employees) collectively shed 15,000 jobs, dragged down by a 27,000-job decline among 250–499 employee firms. Large establishments (500+ employees) were the lone bright spot, adding 30,000 jobs. The divide reinforces a theme seen throughout 2025: larger employers are proving more resilient in preserving headcount as conditions soften.

Despite the historic drop in jobs, wage growth has yet to meaningfully decelerate. ADP’s Pay Insights report showed that annual pay growth for job-stayers held steady at 4.4%, only marginally below May’s 4.5%. Job-changers saw pay gains decelerate slightly to 6.8% from 7.0%, though this still reflects elevated churn premium. This suggests that while employers are hiring less, they are still compensating to retain talent—an indicator of persistent labor tightness in certain industries.

Drilling deeper into pay by industry, job-stayers in the goods-producing sectors continued to see healthy wage increases: natural resources/mining (+4.5%), construction (+4.6%), and manufacturing (+4.6%). These readings imply that skilled labor in physically intensive sectors remains in demand and commands above-average wage growth.

Service-providing sectors showed more variance. Leisure and hospitality posted the strongest gains among service workers (+4.7%), consistent with that sector’s June job growth. Education and health services also held firm with 4.6% pay increases, despite the sector shedding jobs. Financial activities led service sectors in wage growth at 5.2%, reflecting ongoing demand for specialized talent even as hiring pulled back.

ADP’s chief economist, Dr. Nela Richardson, highlighted a "hesitancy to hire and a reluctance to replace departing workers" as key factors driving the contraction. She also noted that layoffs remain rare, reinforcing that companies are trimming through attrition rather than large-scale reductions. This dynamic, if it persists, could signal a more prolonged slowdown in labor churn rather than an outright collapse in demand for labor.

As for revisions, the prior month (May 2025) was adjusted downward from 60,000 to 37,000—a sizable revision that adds to the emerging narrative of labor market cooling. It also means June’s print is not an isolated blip but part of a broader deceleration trend. Combined, the May-June data show private employers have added just 4,000 jobs over the past two months—an astonishing slowdown from the 150K+ monthly pace earlier in 2025.

In total, the June ADP report represents a critical turning point. The combination of job losses, weak hiring at small and mid-sized firms, and persistent wage growth paints a picture of a labor market in transition. Investors and policymakers will likely treat this print as a high-alert signal heading into Friday’s official jobs report. While the Fed remains focused on inflation, the balance may soon shift more toward employment risk—especially if additional weak prints follow.