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ADP Private-Sector Payrolls -33K, Worst in 2+ Years
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Wednesday, July 2, 2025
Ahead of today’s opening bell, the next Jobs Week report has hit the tape, and it is not good: Automatic Data Processing (ADP - Free Report) private-sector payrolls for June came in negative for the first time since March 2023: -33K. This is obviously notably below the +100K analysts were expecting and the downwardly revised +29K the prior month, which was the previous low in more than two years.
Goods-producing jobs held up their end, more or less: +32K last month. Services jobs in the private sector was where the weaknesses lie: -66K. This includes a major shedding of Professional/Business Services jobs, -56K, and Education/Healthcare -52K. Financials were also down -14K. On the other side, Leisure & Hospitality continued to move forward, +32K, with Manufacturing +15K.
Only large companies (more than 500 employees) managed to eke out private-sector gains in June: +30K. Small businesses (fewer than 50 employees) took it on the chin, -47K, while medium-sized firms lost -15K. The current estimate for nonfarm payrolls in tomorrow morning’s Employment Situation report (normally released Friday, which this week is the 4th of July holiday) is +110K. We may see estimates begin to tick down after this morning’s dismal report.
The last time we struck a negative headline on monthly ADP, March 2023, overall economic conditions were quite different than they are right now. The Fed was a year into raising interest rates, touching +5% that month for the first time in 17 years, as the overall Inflation Rate was being wrangled down to 5.0%. Also, massive tornadoes in the South resulted in a state of emergency in Mississippi and a temporary loss of employment for many lower-wage workers.
Currently, it’s white-collar jobs that are disappearing, which may be surprising to some. The temptation to explain the sudden drop in payrolls may be to look at the White House’s massive deportation campaign of undocumented immigrants in the first half of 2025, but very few of these people are business consultants.
If we may issue a hot take from this perspective, it’s the lack of foresight due to tariff policy. Reciprocal tariff initiatives affecting almost all of the U.S. trading partners expires one week from today. We’ll see if by this time next month private-sector payrolls snap back, but that would require a major shift — either in terms of a flurry of new trade deals or a further continuance of the pause on these tariffs. If these do occur, this dip in employment will be a mere blip on the screen.
Trends do not favor this as a likely possibility, however. The trailing four-month average private-sector jobs growth now sits at a mere +51K, not even enough to cover new retirees per month. Average ADP jobs growth throughout the previous eight months was more than triple: +162K per month. For all of 2024, average job growth per month was +144K.
Image: Bigstock
ADP Private-Sector Payrolls -33K, Worst in 2+ Years
Wednesday, July 2, 2025
Ahead of today’s opening bell, the next Jobs Week report has hit the tape, and it is not good: Automatic Data Processing (ADP - Free Report) private-sector payrolls for June came in negative for the first time since March 2023: -33K. This is obviously notably below the +100K analysts were expecting and the downwardly revised +29K the prior month, which was the previous low in more than two years.
Goods-producing jobs held up their end, more or less: +32K last month. Services jobs in the private sector was where the weaknesses lie: -66K. This includes a major shedding of Professional/Business Services jobs, -56K, and Education/Healthcare -52K. Financials were also down -14K. On the other side, Leisure & Hospitality continued to move forward, +32K, with Manufacturing +15K.
Only large companies (more than 500 employees) managed to eke out private-sector gains in June: +30K. Small businesses (fewer than 50 employees) took it on the chin, -47K, while medium-sized firms lost -15K. The current estimate for nonfarm payrolls in tomorrow morning’s Employment Situation report (normally released Friday, which this week is the 4th of July holiday) is +110K. We may see estimates begin to tick down after this morning’s dismal report.
The last time we struck a negative headline on monthly ADP, March 2023, overall economic conditions were quite different than they are right now. The Fed was a year into raising interest rates, touching +5% that month for the first time in 17 years, as the overall Inflation Rate was being wrangled down to 5.0%. Also, massive tornadoes in the South resulted in a state of emergency in Mississippi and a temporary loss of employment for many lower-wage workers.
Currently, it’s white-collar jobs that are disappearing, which may be surprising to some. The temptation to explain the sudden drop in payrolls may be to look at the White House’s massive deportation campaign of undocumented immigrants in the first half of 2025, but very few of these people are business consultants.
If we may issue a hot take from this perspective, it’s the lack of foresight due to tariff policy. Reciprocal tariff initiatives affecting almost all of the U.S. trading partners expires one week from today. We’ll see if by this time next month private-sector payrolls snap back, but that would require a major shift — either in terms of a flurry of new trade deals or a further continuance of the pause on these tariffs. If these do occur, this dip in employment will be a mere blip on the screen.
Trends do not favor this as a likely possibility, however. The trailing four-month average private-sector jobs growth now sits at a mere +51K, not even enough to cover new retirees per month. Average ADP jobs growth throughout the previous eight months was more than triple: +162K per month. For all of 2024, average job growth per month was +144K.
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