(June 3): US companies in May added the most jobs since January 2025, signalling the labour market may be gaining momentum despite rising energy costs sparked by the Iran war.
Private-sector payrolls rose by 122,000 after advancing 105,000 in the prior month, according to ADP Research data out on Wednesday. The median estimate in a Bloomberg survey of economists called for a 120,000 increase.
The figures support the view that the labour market may be strengthening after several months of uneven hiring, as job openings climb and lay-offs remain low. If confirmed in official government data, the trend could support a shift towards bets that the US Federal Reserve (Fed) is more likely to raise interest rates than reduce borrowing costs in the months ahead.
Education and health services led the gains with a 57,000 increase in payrolls, while trade, transportation and utilities added 36,000 jobs. The professional and business services, leisure and hospitality and construction sectors also boosted their headcount. Companies of all sizes added jobs.
“Hiring was more broad-based in May than we have seen in the last few years,” Nela Richardson, the chief economist at ADP and a contributor to Bloomberg Television, said in a statement. “The labour market continues to show sustained momentum going into the summer hiring season.”
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US Treasury yields edged higher after the release and S&P 500 futures remained lower.
The ADP report, published in collaboration with the Stanford Digital Economy Lab, also showed workers who changed jobs saw a 6.5% increase in pay from a year earlier, marking a slowdown from the prior month. Wage growth for those who stayed put was unchanged at 4.4%.
The government’s employment report due on Friday, which also includes public-sector hiring, is expected to show US employers added 85,000 jobs in May, which would mark the strongest three-month stretch of job gains in more than a year.
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Looking ahead, a key question is whether the Middle East conflict that has already driven inflation higher and pushed consumer sentiment to record lows will start to weigh on the labour market as the war enters its fourth month.
Many Fed officials, who meet again June 16-17, have been focused on the war’s impact on inflation, and a growing number have said the central bank should signal its next rate move is just as likely to be a hike as a cut.
ADP bases its findings on payrolls covering more than 26 million US private-sector employees.
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