Private sector hiring expanded at a strong pace, adding 122,000 jobs in May, according to a report released Wednesday by payroll provider ADP.
The jobs added in May were up from 105,000 in April and surpassed the Dow Jones estimate for 110,000 new jobs. It was the strongest month for private sector hiring since January 2025.
The Federal Reserve Board of Governors is closely watching job numbers ahead of its June 16-17 policy meeting. When job growth is too strong, the Fed typically raises or keeps steady interest rates over fears it could fuel inflation.
Markets are pricing in a virtual certainty that the central bank will hold its benchmark interest rate in a range of 3.5%-3.75%
ADP said that, unlike prior months when job growth was concentrated in healthcare and other sectors, the May gains were scattered across the economy. Of the 10 sectors tracked by ADP, eight saw gains. Hiring was also spread evenly by company size and geography.
“Hiring was more broad-based in May than we’ve seen in the last few years,” said ADP’s chief economist, Nela Richardson. “The labor market continues to show sustained momentum going into the summer hiring season.”
Education and health services led with 57,000 hires; trade, transportation and utilities added 36,000; professional and business services contributed 11,000; and construction and leisure and hospitality both increased by 8,000.
Information services lost 9,000 jobs, a likely impact from the growth of artificial intelligence making certain tech jobs obsolete. Natural resources and mining also reported a loss, down 3,000.
Companies with fewer than 50 employees led with 67,000 new hires, while companies with 500 or more employees added 40,000 jobs and midsize firms expanded with 17,000 jobs.
For those staying in their jobs, payroll rose 4.4%, the same as April, while workers who switched jobs saw pay growth drop by 6.5%.
The Bureau of Labor Statistics will issue its job report for May on Friday.
