U.S. Private Sector Loses 33,000 Jobs in June 2025, Wage Growth Persists at 4.4%

The U.S. private sector experienced a significant decline in employment during June 2025, with a loss of 33,000 jobs. This figure is notably lower than the forecasted increase of 100,000 jobs by economists, indicating a surprising downturn in the labor market. The decline in private payrolls follows a downwardly revised increase of 29,000 jobs in May, highlighting a shift in employment trends.

The job losses were predominantly observed in the professional/business services sector, which lost 56,000 jobs, and the education/health services sector, which shed 52,000 jobs. These sectors have traditionally been significant contributors to employment growth, and their contraction suggests a potential slowdown in service-oriented industries. Conversely, the leisure and hospitality, as well as manufacturing sectors, each added 32,000 jobs, providing some stability to the overall employment figures. This uneven performance across sectors underscores a bifurcated economy, where goods-producing sectors demonstrate resilience compared to their service-providing counterparts.

Analyzing the data by establishment size reveals that small businesses faced the most significant challenges, losing 47,000 jobs. Medium enterprises also saw a reduction of 15,000 jobs. In contrast, large establishments, those with 500 or more employees, managed to gain 30,000 jobs. This disparity suggests that smaller enterprises might be grappling with greater operational pressures and potential liquidity constraints, while larger firms have more resources to navigate economic uncertainties.

Despite the employment downturn, wage growth persists. Annual pay for job-stayers increased by 4.4% year-over-year, only slightly down from May's 4.5%. Job-changers also benefited from significant wage growth, albeit at a lower rate of 6.8% compared to 7.0% in the previous month. This wage resilience amidst employment contraction suggests ongoing structural tightness in the labor market, where demand for skilled labor remains high despite the overall job losses.

The June report from ADP highlights a complex scenario for monetary policy considerations. The concurrent trend of job losses combined with sustained wage growth presents a nuanced picture for policymakers. This situation may influence future rate decisions, with the market potentially expecting a cautious approach towards policy easing rather than aggressive cuts. The data suggests that while the labor market is experiencing a downturn, the underlying economic fundamentals, particularly wage growth, remain robust. This duality in the labor market dynamics will likely shape the policy responses and economic outlook in the coming months.