The ADP Jobs Report for May 2025 shows a sharp drop in U.S. private-sector hiring. Only 37,000 jobs were added last month. This is the lowest gain in more than two years. It’s far below the forecast of 110,000 new jobs. The slowdown has sparked new talks about interest rate cuts.
What Is the ADP Jobs Report?
The ADP Jobs Report tracks new private-sector jobs each month. It’s based on data from ADP’s payroll systems. The report provides an early glimpse of job growth before the official government numbers are released.
Economists, investors, and business leaders closely monitor this report. It helps them understand the job market’s health. The report also shows how pay is changing over time.
May 2025 Job Growth Was Weak
In May 2025, U.S. private companies added just 37,000 jobs. That’s a big drop from April’s revised total of 60,000. It’s also way below what experts expected.
This low number signals a weak labor market. It shows businesses may be slowing down hiring. High interest rates and economic uncertainty could be major reasons.
Where the Jobs Came From
The ADP Jobs Report breaks down jobs by sector. Here’s what happened in May:
- Goods-producing jobs dropped by 2,000.
- Service jobs rose by 36,000.
- Gains came mostly from leisure, hospitality, finance, and tech.
- Sectors like construction and manufacturing saw losses.
The growth in services shows people are still spending on travel and dining. But weak numbers in goods suggest less demand in building and production.
Business Size Matters
Not all businesses were affected the same way. The ADP Jobs Report shows job changes by company size:
- Small businesses lost jobs.
- Large firms also cut workers.
- Mid-sized companies (50–499 workers) added 49,000 jobs.
Mid-sized firms seem better at keeping or adding workers. They may be more flexible or have more steady demand.
Wages Stayed Flat
Despite the job slowdown, pay didn’t fall. According to the ADP Jobs Report:
- Job-stayers saw a 4.5% yearly pay rise.
- Job changers also got 4.5% more than a year ago.
This shows that wages are holding steady even as hiring slows. Workers who switch jobs still see strong pay growth. But that could change if the job market weakens more.
Where Hiring Was Strong or Weak
Job growth also changed by region. The ADP Jobs Report highlights key differences:
- The mountain region added 35,000 jobs.
- West South Central region lost 44,000 jobs.
- Other areas had mixed results.
Regional job changes depend on local industries and demand. For example, energy-heavy areas may struggle if oil prices drop.
Political and Market Reactions
The weak numbers in the ADP Jobs Report sparked strong reactions. President Trump called for quick action from the Federal Reserve. He said Fed Chair Jerome Powell was too slow to cut rates.
Markets also reacted:
- The S&P 500 rose slightly, up 0.2%.
- Bond yields dropped, showing higher chances of rate cuts.
Traders now expect the Fed to lower interest rates soon. There’s a 30% chance of a cut by late July. Some believe cuts totaling 0.5% could come later this year.
The Services Sector Is Cooling
The ADP Jobs Report isn’t the only sign of slowing growth. A separate report from the Institute for Supply Management showed a drop in service activity. Their index fell to 49.9. Anything under 50 signals a decline.
This is the first drop in services in nearly a year. That means businesses in retail, travel, and health may be pulling back too.
What Happens Next?
All eyes are now on the official government jobs report from the Bureau of Labor Statistics. That report is expected to show 129,000 new jobs and a steady 4.2% unemployment rate.
If those numbers are also weak, the pressure on the Fed will grow. More slowdowns could mean lower rates, and possibly new support for the job market.
The ADP Jobs Report helps us see early signs. But it’s just one piece of the bigger picture.
Final Thoughts
The May 2025 ADP Jobs Report paints a clear picture. Job growth is slowing. Fewer new roles are being added. Wages are holding steady, but that may not last.
The Fed may need to act soon. Interest rate cuts could help, but only time will tell. For now, businesses and workers must stay alert and ready for change.
