Weak ADP Hiring Data Point to Increasing Rate Cut Potential

This morning, payroll processor ADP reported employers shed 33,000 jobs during the month of June, compared to Wall Street's expectation for an increase of 99,000 and May's downwardly revised gain of 29,000. This was the first contraction since March 2023.

The release means the average monthly gain so far in 2025 is just 57,400 jobs compared to last year's 144,300 and the 2014-2019 (pre-pandemic) average of 173,400.

Since 2017, the typical monthly performance for June has been a gain of 220,000 jobs.

For the second quarter, the average monthly gain slipped to just 28,000 compared to the typical 2017-2024 increase of 166,300.

The pay increase for job stayers fell to 4.4% from 4.5% last month while the same metric for job changers declined to 6.8% versus 7% in May.

At the end of the day, uncertainty around whether the July 9 tariff deadline is going to be extended and high interest rates are likely causing companies to hold off on adding more employees. Based on the most recent PCE data, the Federal Reserve has roughly 210 basis points worth of room to lower rates and provide economic support.