Key Takeaways:
U.S. private employers added an average of 16,500 jobs per week in the four weeks through July 4, the weakest pace in the current data series and the fourth straight weekly decline.
U.S. private-sector hiring slowed for a fourth consecutive week, with employers adding an average of 16,500 jobs in the four weeks through July 4, ADP data showed Tuesday, as the labor market loses momentum after a strong start to the year.
"The steady deceleration in weekly hiring suggests employers are pulling back on staffing because of growing uncertainty about demand," said James Okafor, macro analyst at Edgen. "The pace has fallen by more than half since early May."
The four-week moving average has dropped from 40,750 in the period ending May 2 to 16,500 — a decline of nearly 60 percent. The June 27 reading of 19,250 was revised lower from an initial estimate, and the trend has been consistently downward since mid-May. The data, produced by ADP Research in collaboration with the Stanford Digital Economy Lab, is seasonally adjusted and carries a two-week lag.
The weakening trend in private hiring strengthens the case for the Federal Reserve to begin cutting interest rates as early as September. Overnight index swaps price a 62 percent probability of a quarter-point reduction at the Sept. 17 meeting, according to CME data. If the July nonfarm payrolls report — due Aug. 7 — confirms the ADP signal, that probability could rise above 80 percent.
The ADP NER Pulse, which publishes weekly at 8:15 a.m. ET, offers a higher-frequency read on the labor market than the Bureau of Labor Statistics' monthly report. The latest reading of 16,500 compares with a 12-week average of roughly 28,000, showing the breadth of the slowdown. Hiring peaked at 40,750 in the week ending May 2 and has declined every week since, with the pace of decline accelerating through June.
Treasury yields have already begun to reflect the weaker labor outlook. The 2-year yield, most sensitive to Fed policy expectations, has fallen 18 basis points over the past two weeks to 4.60 percent. The 10-year yield stands at 4.60 percent, narrowing the spread and flattening the curve — a pattern that typically precedes rate cuts. The last time hiring decelerated this rapidly was in mid-2024, when the economy added an average of roughly 12,000 private jobs per week in June of that year. The Fed responded by cutting rates 25 basis points in September 2024, a precedent that may inform current market pricing.
The deceleration has been most pronounced in goods-producing industries, though ADP does not break out sector-level detail in the weekly pulse. The monthly ADP National Employment Report, which uses a reference week including the 12th of the month, is expected to provide a fuller picture when it is released in early August. The next NER Pulse release is scheduled for July 28.
This article is for informational purposes only and does not constitute investment advice.
