Another warning of the U.S. economy slowing flashed on Wednesday as private companies added only 27,000 new jobs in May, the fewest in nine years, according to a private survey by payroll processor ADP.
“The economy’s growth rate has slowed sharply from last year. That is now starting to show up in the job market.”
The figure comes as a bit of a shock after ADP reported 271,000 new jobs were created in April which was the most in nine months. Mark Zandi, chief economist at Moody’s Analytics, said the average of the two months, around 150,000, is a representation of the broader hiring trend. Last year’s average monthly gains were well above that number at about 225,000.
“The economy’s growth rate has slowed sharply from last year,” Zandi said in a statement. “That is now starting to show up in the job market.”
The biggest slowdown was seen in small companies with less that 50 employees. Those companies reported a loss of 52,000 jobs, with almost all of those losses hitting companies with fewer than 20 employees. The goods-production sector also reported big losses of 43,000 jobs with 36,000 of those positions lost in construction, the biggest drop since 2010, according to Bloomberg.
Large companies made off better, adding 68,000 jobs, and companies with 50 to 499 employees added another 11,000.
“Following an overly strong April, May marked the smallest gain since the expansion began,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. “Large companies continue to remain strong as they are better equipped to compete for labor in a tight labor market.”
This report comes at a bad time as the U.S. economy is facing some turmoil after showing signs of growth in the first months of 2019. Overall GDP growth was solid for 2018 at 2.9%, and the first quarter of the year shocked many with a 3.1% growth rate, but economist expect that to slow greatly in the next two quarters. Gains of only 1.7% in the second quarter are being forecasted by CNBC’s Rapid Update survey.
The Associated Press contributed to this article.