The pace of job creation in the U.S. private sector fell short of expectations in June, suggesting a slight easing in labor market conditions.

Private employers in the U.S. added 150,000 jobs last month, a decrease from upwardly the revised 157,000 jobs in May and below the forecasted 161,000 jobs, according to the latest ADP National Employment Report. It marks the third straight month of a reduced pace in the U.S. private employment growth.

This report – generated by Automated Data Processing Inc. (NYSE:ADP) using payroll data from over 500,000 companies and more than 25 million employees – provides an early snapshot of employment trends ahead of official jobs report from the Bureau of Labor Statistics.

On Tuesday, Fed Chair Jerome Powell suggested that the labor market is moving toward a healthier balance, with the unemployment rate approaching sustainable levels and wage growth leveling off. "The labor market is cooling off appropriately, and we're watching it very carefully," he stated.

June's ADP National Employment Report: Key Highlights

• Services-providing companies added 136,000 jobs, while goods producers added 14,000.
• Industries experiencing increases in employment include leisure and hospitality (63,000), construction (27,000), professional and business services (25,000), trade, transportation, and utilities (15,000), education/health services (9,000), and financial activities (11,000).
• Industries witnessing job contractions were natural resources/mining (down by 8,000), manufacturing (down by 5,000) and information (down by 3,000).
• Year-over-year pay increases for job-stayers were 4.9% in June, marking the slowest growth rate since August 2021. Pay gains for those who switched jobs also decelerated, reaching 7.7%.
• "Job growth has been solid, but not broad-based. Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month." Nela Richardson, chief economist at ADP, said.

Market Reactions

Prior to the ADP data, traders had factored in 50 basis points of rate cuts by year end, assigning a 65% chance on first rate reduction in September.

The U.S. Dollar Index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), held steady following the ADP release.

Futures on U.S. equity indices were flat during the premarket trading Wednesday, following the rally seen Tuesday.

On Tuesday, the Nasdaq 100, as tracked by the Invesco QQQ Trust (NASDAQ:QQQ), hit a record-high close, buoyed by the rally in tech giants.

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