The latest data from the ADP (Automatic Data Processing) employment report shows clear signs of weakness in the US labor market. Specifically, private sector employment in the US decreased by 33,000 in June 2025 - the largest decline since March 2023. This development is raising concerns that the US labor market's recovery momentum may be losing steam after a period of sustained growth.
According to forecast data, ADP employment for June was expected to reach 95,000, a significant increase from the modest 37,000 of the previous month. However, the actual decline of 33,000 shows a substantial gap from expectations, reflecting the increasingly cautious sentiment among US businesses amid a macroeconomic environment full of uncertainties.
Economic experts note that the weakness in recruitment activities primarily stems from sectors sensitive to high interest rates, such as real estate, finance, and consumer services. Many small and medium-sized enterprises - which account for a large proportion of ADP figures - are cutting back or pausing workforce expansion plans to cope with rising borrowing costs and less positive economic prospects in the second half of 2025.
ADP data is an important indicator, typically closely monitored by investors and policymakers before the official Nonfarm Payrolls report is released by the US Department of Labor. The significant drop in ADP employment numbers could increase expectations that the Federal Reserve (Fed) may need to adjust monetary policy in a more accommodative direction, especially as inflation shows signs of cooling.
