US ADP employment data in May fell sharply short of expectations. Trump commented swiftly: "Powell should cut interest rates."

Data released by Automatic Data Processing, Inc. (ADP) on Wednesday (June 4) showed that amid various macroeconomic uncertainties, private sector employment growth in the US slowed to near stagnation in May, indicating signs of weakness in the US labour market.

Specifically, US ADP employment increased by 37,000 in May, the smallest increase since March 2023 and far below the expected 114,000. The April figure was revised down by 20,000 to 60,000.

Following the data release, the US dollar index extended its short-term decline by 20 points, while spot gold surged by $6 before pulling back.

Nela Richardson, ADP's chief economist, stated that after a strong start to the year, hiring is losing momentum. However, wage growth in May remained largely unchanged, maintaining robust levels for both job stayers and job switchers, which is an encouraging sign. Specifically, wage increases for employees who stayed in their positions and those who switched jobs were 4.5% and 7%, respectively.

Richardson attributed the weakness in the labour market to low consumer confidence and uncertainty surrounding trade policies. "For some of our companies here, it's like driving in the fog. When you're in that situation, you really can't stop, but you might slow down... When it comes to hiring, you hesitate because there's a lot of uncertainty."

Over the past two months, heightened anxiety surrounding Trump's evolving tariff and economic policies has negatively impacted corporate hiring decisions. Hiring has slowed, and it is taking longer for those who are unemployed to find new jobs. Economists expect the labour market to show more signs of cooling in the coming months.

The report indicated that the vast majority of new private sector jobs in May came from the service sector, particularly in leisure and hospitality. In contrast, jobs in manufacturing and natural resources/mining declined.

Goods-producing industries lost 2,000 jobs, with natural resources and mining shedding 5,000, manufacturing cutting 3,000, but construction adding 6,000, partially offsetting these losses.

The service sector added only 36,000 jobs, with leisure and hospitality contributing 38,000 and financial services adding 20,000. However, professional/business services lost 17,000 jobs, and education and health services shed 13,000.

Notably, Trump commented on social media that the ADP employment report was out, and Fed Chairman Powell, "Mr. Too Late," must now cut interest rates. He's speechless. Europe has cut interest rates nine times!

Last week, Trump met with Powell at the White House to discuss economic development, but the statement released indicated that the two sides remained at odds. Powell emphasized to Trump that monetary policy must be guided by economic data, not politics.

However, Oliver Allen, Senior US Economist at Pantheon Macroeconomics, suggested, as usual, that the information conveyed by the ADP employment report should be ignored, mainly because the report's track record in recent years has been very poor. Although hiring in the private sector was not good in May, it was not as bad as feared, with the rate of decline slowing compared to before.