ADP National Employment Report: Private Sector Employment Increased by 37,000 Jobs in May; Annual Pay was Up 4.5%

Rhea-AI Summary

ADP's National Employment Report for May 2025 shows private sector employment increased by 37,000 jobs, marking the lowest hiring pace since March 2023. Annual pay growth remained steady at 4.5% for job-stayers and 7.0% for job-changers. The service-providing sector added 36,000 jobs, while goods-producing sectors declined by 2,000. Leisure/hospitality led growth with 38,000 jobs, followed by financial activities with 20,000. By region, the West showed strongest growth (+37,000), while the Northeast declined (-19,000). Medium-sized establishments (50-249 employees) showed the most robust hiring with 51,000 jobs. The report, based on ADP's payroll data covering over 25 million U.S. employees, indicates a cooling labor market despite sustained wage growth.

Positive

• Annual pay growth remains robust at 4.5% for job-stayers and 7.0% for job-changers
• Leisure/hospitality sector showed strong growth with 38,000 new jobs
• Financial activities sector added 20,000 jobs
• Medium-sized establishments (50-249 employees) demonstrated strong hiring with 51,000 jobs

Negative

• Overall private sector job growth slowed to 37,000, the lowest level since March 2023
• Professional/business services sector lost 17,000 jobs
• Education/health services declined by 13,000 jobs
• Small establishments showed negative growth with 13,000 jobs lost

Insights

Labor Economist

ADP report reveals sharp hiring slowdown with only 37,000 private jobs added in May, lowest since March 2023, despite persistent wage pressure.

The latest ADP National Employment Report signals a significant deceleration in labor market momentum, with private employers adding just 37,000 jobs in May 2025 - the slowest pace since March 2023 and substantially below April's revised 60,000 gain. This dramatic cooling follows what had been characterized as a "strong start to the year."

The sectoral breakdown reveals concerning divergence. While leisure/hospitality added 38,000 jobs and financial activities contributed 20,000, several critical sectors contracted, including professional/business services (-17,000), education/health services (-13,000), and manufacturing (-3,000). The geographic disparity is equally striking, with the West South Central region shedding 44,000 jobs while the Mountain region added 35,000.

Despite this hiring pullback, wage growth remains stubbornly elevated at 4.5% year-over-year for job-stayers and 7.0% for job-changers, unchanged from April. This persistent wage pressure despite cooling employment creates a challenging economic scenario that suggests underlying inflation concerns haven't abated even as hiring decelerates. Small establishments (under 50 employees) shed 13,000 positions, while medium-sized companies (50-249 employees) drove most gains with 51,000 new jobs, indicating that labor market stress may be disproportionately affecting smaller businesses.

ROSELAND, N.J., June 4, 2025 /PRNewswire/ -- Private sector employment increased by 37,000 jobs in May and annual pay was up 4.5 percent year-over-year, according to the May ADP^® National Employment Report^TM produced by ADP Research in collaboration with the Stanford Digital Economy Lab ("Stanford Lab"). The ADP National Employment Report is an independent measure and high-frequency view of the private-sector labor market based on actual, anonymized payroll data of more than 25 million U.S. employees.

The jobs report and pay insights use ADP's fine-grained anonymized and aggregated payroll data to provide a representative picture of the private-sector labor market. The report details the current month's total private employment change, and weekly job data from the previous month. Because the underlying ADP payroll databases are continuously updated, the report provides a high-frequency, near real-time measure of U.S. employment. This measure reflects the number of employees on ADP client payrolls (Payroll Employment) to provide a richer understanding of the labor market. As of January 2025, ADP's Pay Insights measure captures nearly 14.8 million individual pay change observations each month, up from nearly 10 million when it launched.

"After a strong start to the year, hiring is losing momentum," said Dr. Nela Richardson, chief economist, ADP. "Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers."

May 2025 Report Highlights*

View the ADP National Employment Report and interactive charts at www.adpemploymentreport.com.

JOBS REPORT

Private employers added 37,000 jobs in May
The pace of hiring in May reached its lowest level since March 2023.

Change in U.S. Private Employment:     37,000

Change by Industry Sector
- Goods-producing:     -2,000

• Natural resources/mining     -5,000
• Construction     6,000
• Manufacturing     -3,000

- Service-providing:     36,000

• Trade/transportation/utilities     -4,000
• Information     8,000
• Financial activities     20,000
• Professional/business services     -17,000
• Education/health services     -13,000
• Leisure/hospitality     38,000
• Other services     4,000

Change by U.S. Regions
- Northeast:     -19,000

• New England     -16,000
• Middle Atlantic     -3,000

- Midwest:     20,000

• East North Central     23,000
• West North Central     -3,000

- South:     -5,000

• South Atlantic     20,000
• East South Central     19,000
• West South Central     -44,000

- West:     37,000

• Mountain     35,000
• Pacific     2,000

Change by Establishment Size
- Small establishments:     -13,000

• 1-19 employees     -6,000
• 20-49 employees     -7,000

- Medium establishments:     49,000

• 50-249 employees     51,000
• 250-499 employees     -2,000

- Large establishments:     -3,000

• 500+ employees     -3,000

PAY INSIGHTS

Pay gains were little changed in May
Year-over-year pay growth for job-stayers was little changed in May, at 4.5 percent. Pay for job-changers rose 7 percent, unchanged from April's revised figure.

Median Change in Annual Pay (ADP matched person sample)
- Job-Stayers     4.5%
- Job-Changers     7.0%

Median Change in Annual Pay for Job-Stayers by Industry Sector 
- Goods-producing:                                                       

• Natural resources/mining     4.5%
• Construction     4.6%
• Manufacturing     4.6%

- Service-providing:                                               

• Trade/transportation/utilities     4.2%
• Information     4.2%
• Financial activities     5.2%
• Professional/business services     4.2%
• Education/health services     4.6%
• Leisure/hospitality     4.8%
• Other services     4.3%

Median Change in Annual Pay for Job-Stayers by Firm Size
- Small firms:                                                                

• 1-19 employees     2.6%
• 20-49 employees     4.1%

- Medium firms:                                                             

• 50-249 employees     4.8%
• 250-499 employees     4.9%

- Large firms:                                                                

• 500+ employees     4.8%

To see Pay Insights by U.S. State, Gender, and Age for Job-Stayers, visit here.

* Sum of components may not equal total due to rounding.

The April total number of jobs added was revised from 62,000 to 60,000. The historical data file and weekly data for the previous month are available at https://adpemploymentreport.com/.

To subscribe to monthly email alerts or obtain additional information about the ADP National Employment Report, including employment and pay data, interactive charts, methodology, and a calendar of release dates, please visit https://adpemploymentreport.com/.    

The June 2025 ADP National Employment Report will be released at 8:15 a.m. ET on July 2, 2025.

About the ADP® National Employment Report^TM

The ADP National Employment Report is an independent measure of the change in U.S. private employment and pay derived from actual, anonymized payroll data of client companies served by ADP, a leading provider of human capital management solutions. The report is produced by ADP Research in collaboration with the Stanford Digital Economy Lab.

The ADP National Employment Report is broadly distributed to the public each month, free of charge, as part of the company's commitment to offering deeper insights of the U.S. labor market and providing businesses and governments with a source of credible and valuable information.

About the ADP Research

The mission of ADP Research is to make the future of work more productive through data-driven discovery. Companies, workers, and policymakers rely on our finely tuned data and unique perspective to make informed decisions that impact workplaces around the world.

About ADP (NASDAQ – ADP)

Designing better ways to work through cutting-edge products, premium services and exceptional experiences that enable people to reach their full potential.  HR, Talent, Time Management, Benefits and Payroll. Informed by data and designed for people.   Learn more at ADP.com

ADP, the ADP logo, and Always Designing for People, ADP National Employment Report, and ADP Research are trademarks of ADP, Inc. All other marks are the property of their respective owners.

Copyright © 2025 ADP, Inc. All rights reserved.

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SOURCE ADP, Inc.

FAQ

What was ADP's private sector employment change in May 2025?

According to ADP's report, private sector employment increased by 37,000 jobs in May 2025, marking the lowest hiring pace since March 2023.

What was the annual pay growth rate for job-stayers in ADP's May 2025 report?

The annual pay growth rate for job-stayers was 4.5% in May 2025, while job-changers saw a 7.0% increase.

Which sectors showed the strongest job growth in ADP's May 2025 report?

Leisure/hospitality led with 38,000 new jobs, followed by financial activities with 20,000 jobs added.

How did different-sized businesses perform in ADP's May 2025 employment report?

Medium-sized establishments (50-249 employees) added 51,000 jobs, while small establishments lost 13,000 jobs and large establishments decreased by 3,000 jobs.

Which U.S. regions showed the strongest employment growth in ADP's May 2025 report?

The West region showed the strongest growth with 37,000 jobs added, followed by the Midwest with 20,000 jobs, while the Northeast declined by 19,000 jobs.