Based on ADP, the variety of non-public staff rose by 278,000 in Could, considerably exceeding expectations

The US job market enjoyed another surprisingly strong month in May as companies added jobs well above expectations, according to a report by payroll firm ADP on Thursday.

Private sector employment rose a seasonally adjusted 278k this month, ahead of the Dow Jones estimate of 180k and slightly below April’s revised down 291k. The increase in May took wage growth so far in 2023 to 1.09 million.

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The ADP report found that the distribution of job gains for the month was “fragmented” as gains were concentrated in leisure and hospitality, which added 208,000 jobs, and natural resources and mining, which added 94,000 .

64,000 jobs were created in construction, but there were declines in several other categories.

For example, manufacturing saw a 48k decline, financial activities lost 35k and education and healthcare fell 29k. Trade, transport and utilities were up 32,000, while the other services category gained 12,000.

Relative to size, companies with 500 or more employees lost 106,000 jobs. Small businesses with fewer than 50 employees have created 235,000 jobs.

One area of ​​note for ADP was the slowing pace of wage increases, with annual wages still rising a robust 6.5% in May but below April’s 6.7% increase. Those who changed jobs saw an annual increase of 12.1%, down one percentage point from the previous month.

“This is the second month that we have seen a full percentage point decline in wage growth for job-changers,” said Nela Richardson, ADP’s chief economist. “Wage growth is decelerating significantly and wage-related inflation should be less of a concern for the economy, despite robust hiring.”

The ADP count comes a day ahead of the more closely watched Labor Department’s nonfarm payrolls report, which is expected to show job growth of 190k in May, after a gain of 253k in April.

The ADP report serves as a precursor to the government’s balance sheet, although the two can sometimes differ significantly. Private payrolls rose by 230,000 in April, according to the Labor Department.

The wage gains came despite the Federal Reserve’s efforts to fight inflation and rein in the labor market through a series of rate hikes. Central bank officials have said in recent days that they may be in favor of forgoing another rate hike in June as they weigh the impact of monetary tightening that began in March 2022.

A separate report on Thursday showed that initial jobless claims were little changed last week.

Jobless claims for the week ended May 27 totaled 232,000, up 2,000 from the previous week and slightly below the Dow Jones estimate of 235,000. Current receivables also rose slightly to 1.795 million.