Private sector job creation fell short of expectations in June, adding 98,000 positions against a Dow Jones consensus forecast of 110,000, according to ADP.
The figure marks a decline from the 122,000 jobs added in May, signalling a continued cooling in the pace of US private sector hiring.
Nearly half of all new jobs created in June came from the education and health services sector, which contributed 48,000 positions and remains a consistent driver of payroll growth.
All but 2,000 of the month’s new jobs were concentrated in the services sector, reflecting an ongoing shift away from goods-producing industries.
Other sectors posting gains included trade, transportation and utilities with 15,000 new roles, financial activities with 14,000, and other services contributing 8,000 positions.
Natural resources and mining was the only sector to shed jobs, losing 5,000 positions during the month, while leisure and hospitality added just 2,000 roles.
The weak performance in leisure and hospitality is seen as a concern, given the sector’s role as a broader indicator of underlying consumer demand and spending confidence.
Nela Richardson, ADP’s chief economist, said: “The pace of hiring is telling a story of both supply and demand. We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries.”
Richardson added: “For now, the overall effect is a slowdown in job creation.”
Annual pay gains for workers staying in their jobs held steady at 4.4%, while pay growth for job switchers edged higher to 6.6%, suggesting some workers still benefit from changing roles.
Employment gains were skewed towards smaller businesses, with establishments employing fewer than 50 workers adding 53,000 positions, compared to 25,000 at firms with 500 or more employees.
The ADP report serves as a precursor to the more closely watched nonfarm payrolls data due from the Bureau of Labor Statistics, which has generally outpaced ADP’s figures in recent months.
Wall Street forecasts point to payrolls rising by 115,000 in June, with the unemployment rate expected to hold steady at 4.3% and average hourly earnings rising 0.3% on the month.