U.S. private payrolls increased more than expected in May, suggesting that the labor market was slowing only gradually, which could result in the Federal Reserve keeping interest rates elevated for some time.
Private payrolls increased by 278,000 jobs last month, the ADP National Employment report showed on Thursday. Data for April was revised slightly down to show 291,000 jobs added instead of 296,000 as previously reported. Economists polled by Reuters had forecast private employment increasing 170,000.
Job growth has slowed from last year's robust pace, but the labor market has remained resilient despite 500 basis points worth of interest rate hikes from the Fed since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation.
The government reported on Wednesday that there were 10.1 million job openings at the end of April. There were 1.8 job openings for every unemployed person in April, up from 1.7 in March, and well above the 1.0-1.2 range that is considered consistent with a balanced labor market.
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the Labor Department's Bureau of Labor Statistics' more comprehensive and closely watched employment report for May on Friday.
According to a Reuters survey of economists, private payrolls likely increased by 165,000 jobs in May. With further gains anticipated in government employment, total nonfarm payrolls are forecast to have risen by 190,000 jobs last month after advancing 253,000 in April.
