Private businesses in the US added just 37,000 workers to their payrolls in May 2025, marking the weakest monthly gain since March 2023.
US private sector job growth lowest in two years
This figure came in well below market expectations of 115,000 and followed a downwardly revised 60,000 jobs added in April, suggesting that the post-pandemic labor market recovery may be cooling. The services sector accounted for nearly all of May’s job creation, adding 36,000 positions. Gains were led by leisure and hospitality (+38K), financial activities (+20K), and information (+8K). However, these gains were partially offset by notable declines in professional and business services (-17K), education and health services (-13K), and trade, transportation, and utilities (-4K).
In the goods-producing sector, overall employment fell by 2,000. Job losses in natural resources and mining (-5K) and manufacturing (-3K) outweighed a 6,000-job increase in construction, reflecting ongoing challenges in industrial activity amid tight credit conditions and fluctuating demand.
Wage growth remained steady
Wage growth remained steady, signaling continued labor market tightness despite slowing hiring. Annual pay growth for job-stayers held at 4.5%, while job-changers saw a 7% increase, unchanged from April’s revised figure. “After a strong start to the year, hiring is losing momentum. Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers,” noted Dr. Nela Richardson, chief economist at ADP.
The softer employment figures may further complicate the Federal Reserve’s policy outlook, as policymakers weigh signs of labor market cooling against persistently strong wage growth and inflationary pressures.
