Jerome Powell faces pressure as ADP jobs report shows weak hiring
Private payrolls grew by just 37,000 in May, the lowest since March 2023, fueling Trump's calls for rate cuts amid a slowing labor market.
Private sector job growth slowed sharply in May, with employers adding just 37,000 positions, according to the latest ADP National Employment Report. This marks the lowest monthly gain since March 2023 and falls well below economists' expectations of 110,000 jobs. The slowdown has reignited debates over the Federal Reserve's monetary policy stance.
ADP Chief Economist Nela Richardson noted hiring momentum has weakened after a strong start to the year. The report revealed mixed sector performance, with leisure and hospitality adding 38,000 jobs while professional services and education saw significant declines. Wage growth held steady at 4.5% for job-stayers and 7% for job-changers.
President Donald Trump immediately seized on the disappointing numbers, demanding Federal Reserve Chair Jerome Powell cut interest rates. In a Truth Social post, Trump wrote, "ADP NUMBER OUT!!! 'Too Late' Powell must now LOWER THE RATE." This continues Trump's ongoing criticism of Powell's monetary policy approach.
The White House confirmed Trump recently told Powell he was making a mistake by keeping rates high, arguing it puts the U.S. at a competitive disadvantage. The Fed maintains its decisions are based on economic data rather than political pressure.
The weak ADP report comes ahead of Friday's more comprehensive Bureau of Labor Statistics employment data, expected to show 125,000 jobs added in May. Economists caution that while the labor market appears to be cooling, inflationary pressures from new tariffs complicate the Fed's decision-making.
Fed officials have expressed concerns about how tariffs might impact both prices and employment. Governor Lisa Cook recently warned that heightened uncertainty poses risks to both price stability and unemployment levels.
As the Fed prepares for its next meeting, all eyes remain on whether policymakers will maintain their current stance or respond to signs of economic softening. The coming months will test the central bank's ability to navigate competing pressures while fulfilling its dual mandate.
