1 of 2 | Private payroll processor ADP found hiring remains relatively strong, though wage growth is starting to slow. File photo by Jim Ruymen/UPI | License Photo
June 1 (UPI) -- Hiring in the U.S. economy remains somewhat resilient to inflationary pressures, though wage growth is starting to slow, the latest employment snapshot from private payroll processor ADP found.
ADP on Thursday reported that private-sector employment expanded by 278,000 last month. That's a slowdown from the 291,000 in April, but much stronger than the 236,000 from March.
By sector, ADP showed a mixed bag, with leisure and hospitality accounting for 75% of the gains last month, balanced by a combined 83,000 in losses in manufacturing and finance.
On wages, Nela Richardson, the chief economist at ADP, said this marks the second month in a row for a decline in pay.
"Pay growth is slowing substantially, and wage-driven inflation may be less of a concern for the economy despite robust hiring," she said.
For those staying in their current positions, wages increased by 6.5% in May, down from 6.7% during the prior month. Job changers got a 12.1% boost in pay, down 1 percentage point from April.
The slowdown in wages may be welcome news for officials at the Federal Reserve working to cool the economy with successive increases in lending rates. Higher wages can lead to an increase in discretionary spending, driving inflation higher due to demand strains.
The so-called Beige Book, a summary of economic conditions across the various Fed districts, showed hiring remains strong, though strength is waning.
"Many contacts said they were fully staffed, and some reported they were pausing hiring or reducing headcounts due to weaker actual or prospective demand or to greater uncertainty about the economic outlook," it read.
Fed officials meet again later this month to consider their next move on rates. Inflation is running at more than double the 2% target rate set by the Fed, though there are emerging indicators that policies are working as intended.
On overall conditions, the Beige Book showed little change in economic activity in April to early May.
"Expectations for future growth deteriorated a little, though contacts still largely expected a further expansion in activity," it read.