Weak May Jobs Report Fuels Trump's Call for Fed Rate Cuts: ADP data reveals slowest private sector job growth since March 2023, adding to economic concerns and boosting market expectations for interest rate reductions
Weak US Jobs Report Fuels Rate Cut Calls: ADP data reveals sluggish private sector job growth, raising economic concerns ahead of Friday's crucial nonfarm payroll report. Market reaction includes falling stock futures and rising bond yields, increasing expectations of a Federal Reserve interest rate cut
US Private Sector Jobs Growth Stalls: May's 37,000 New Jobs Miss Forecasts by a Mile
Adding only 37,000 private sector jobs in May—significantly below the projected 110,000—signals a weakening US economy, according to ADP and Dow Jones data. This underwhelming jobs report fuels calls for Federal Reserve interest rate cuts
ADP reports sluggish May job growth: Private sector employment increased by only 37,000, significantly below expectations, with small business jobs falling by 13,000 and manufacturing jobs declining by 3,000. This weak jobs report fuels calls for Fed rate cuts
Weak ADP Jobs Report Fuels Trump's Call for Fed Rate Cut: President Trump seized on May's disappointing private sector job growth—a mere 37,000 jobs added, far below expectations—to renew his demand for the Federal Reserve to lower interest rates, aiming to boost economic activity and the labor market. His social media post urged the Fed to "LOWER THE RATE" immediately. This follows concerns about economic slowdown and precedes Friday's crucial nonfarm payrolls report
Some tariff-related slowdown in the labor market is expected, the question is how significant it will be, and how the markets will respond,” Chris Larkin, head of trading and investing at E-Trade, wrote in emailed comments.
Markets turned more risk averse following the ADP report. Futures for all three major U.S. stock indexes turned negative, while yields for government bonds jumped across medium and long run maturities. That included a 6-basis-point drop for the benchmark 10-year Treasury note to 4.41%. Lower bond yields mean more valuable bonds. Wall Street also slightly adjusted its expectations of a rate cut this summer, as the market-implied odds of a June or July cut increased from 70% to 75% Wednesday.
The Labor Department’s May nonfarm payrolls report, the primary yardstick of the U.S. employment picture, will come out Friday at 8:30 a.m. EDT. Economists project the government to report 125,000 monthly job growth and an unemployment rate of 4.2%.
4.5%. That’s where Goldman Sachs economists forecast unemployment will rise to by September, which would be the highest jobless rate since October 2021 as the economy emerged from the COVID-19 pandemic. Prior to the pandemic, unemployment hadn’t reached 4.5% since February 2017.
Trump’s tug-of-war with the politically independent Fed, and namely the central bank’s top official Jerome Powell, has been a constant during his second term, as the president has argued for rate cuts to jolt the economy. The Fed, which has insisted it sets monetary policy based on data and not political influence, has not lowered rates since December, attributing its hesitancy largely to the economic uncertainty and potential inflation boost presented by Trump’s variable tariffs. Lower interest rates typically result in stronger job growth as employers can finance operations with cheaper debt, though they can also stoke inflation as consumers similarly are incentivized to spend more freely with lower borrowing costs. Trump teased firing Powell in April, but met with the top central banker last week for the first time since he re-took office.
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