Hiring by U.S. companies surged more than expected in June, pointing to a labor market that remains tight even in the face of higher interest rates, according to the ADP National Employment Report released Thursday morning.
Companies added 497,000 jobs last month, more than double the 228,000 gain that economists surveyed by Refinitiv predicted. That is also higher than the downwardly revised 267,000 increase recorded in May.
The surprise jump in payrolls comes despite an aggressive interest rate hike campaign by the Federal Reserve that spanned 15 months.
In a potentially welcoming sign for the Fed as it tries to wrangle stubborn inflation under control, wages continued to moderate in June. Annual pay rose 6.4% last month, down from 6.6% in May, according to the report. For workers who switched jobs, wages climbed 11.2%, down almost a full percentage point from the previous month.
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“Consumer-facing service industries had a strong June, aligning to push job creation higher than expected,” said ADP chief economist Nela Richardson. “But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”
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The data precedes the release of the more closely watched June jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 225,000 workers following a gain of 339,000 in May. The unemployment rate is expected to inch lower to 3.6%.
This is a developing story. Please check back for updates.