ADP: Job creation drops to 9-year low in May

Job growth in the private sector slowed dramatically in May, adding to concerns of a deceleration in US economic expansion.

The latest national employment report from the ADP Research Institute and Moody's Analytics shows that private-sector jobs grew month over month in May, although by an underwhelming number. A recent string of weak reports on retail sales, factory orders and home purchases indicate growth is slowing as the trade war weighs on businesses. Mark Zandi, chief economist at Moody's Analytics, which helps compile the data, said the broader hiring trend is probably closer to the average of the two month's gains, at around 150,000.

USA services sector activity expanded at a brisk pace in May and industries hired more workers, offering some respite for an economy that is slowing following a temporary boost from exports and an accumulation of inventories in the first quarter.

In the goods-producing sector, all three industries saw job losses.

Stocks on Wall Street were trading higher. The ADP reported 271,000 additional jobs in April, while the BLS reported 236,000.

Private-sector employment increased by 27,000 jobs from April, with service sectors leading the charge to the tune of 71,000 jobs added in May.

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"We are closely monitoring the implications of these developments for the USA economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective", Powell told a monetary policy conference in Chicago on Friday. Growth is expected to continue to slow as the global economy weakens, in part due to the Trump administration's new tariffs. CNBC's Rapid Update survey forecasts gains of just 1.7% in the second quarter.

The goods-producing sector, which accounts for construction, manufacturing and natural resource extraction, shed 43,000 jobs in May.

The federal government's May jobs report will be released Friday.

Economists polled by Reuters are forecasting non-farm payrolls to have increased 185,000 in May.

According to the ADP report, employment in the goods-producing sector fell by 43,000 jobs in May, the first drop in almost 2-1/2 years. The leisure and hospitality industry gained 16,000 jobs while the education and health sector gained more than double that, adding 33,000 positions.

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