The S&P 500 ETF (SPY) erased its morning gains after data from the private employer sector came in well below expectations. In June, private payrolls fell by 33,000 while economists were expecting an addition of 98,000 jobs. Private payrolls increased by 29,000 in May, which was revised lower from 37,000. June marks the first time that private payroll jobs turned negative since March 2023.
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“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” said ADP (ADP) Chief Economist Nela Richardson. “Still, the slowdown in hiring has yet to disrupt pay growth.”
Business and Education Services Hit by Job Losses
The professional and business services sector witnessed the most job losses at 56,000, followed by education and health services with 52,000 losses. On the other hand, leisure and hospitality jobs increased by 32,000 as the summer season hits its peak.
With fewer people employed, consumers are less likely to purchase goods and services, lowering economic and corporate growth. That also negatively impacts the stock market in the process. While today’s private payrolls report is concerning, it’s still too early to tell if the job losses will turn into a trend.
SPY is down by 0.09% at the time of writing as investors digest the news.
