US Private Sector Adds 122,000 Jobs in May, Beats Forecasts

The US private sector added 122,000 jobs in May, exceeding economist expectations and marking the strongest month of hiring since January 2025, according to the latest ADP National Employment Report. The figure surpassed the Dow Jones consensus estimate of 110,000 and Fox Business economist expectations of 117,000, providing a positive signal for the labor market ahead of the official government jobs report due Friday.

Broad-Based Hiring Momentum

The May data represents a notable acceleration from April, when payroll gains were revised lower to 105,000 from an initially reported 109,000. ADP’s report, produced in collaboration with the Stanford Digital Economy Lab, draws on anonymized weekly payroll data from more than 26 million private-sector employees.

“Hiring was more broad-based in May than we’ve seen in the last few years,” said Dr. Nela Richardson, chief economist at ADP. “The labor market continues to show sustained momentum going into the summer hiring season.”

Heather Long, chief economist at Navy Federal Credit Union, offered a similarly upbeat assessment. “The ADP jobs report for May surprised to the upside with 122,000 private sector job gains, the most since January 2025,” Long told Fox Business. “While healthcare made up nearly half of the jobs, there were increases in almost every industry. It’s a much better picture for job seekers this summer than last year.”

Industry and Size Breakdown

Education and health services led all sectors with 57,000 new positions, accounting for nearly half of total gains. Trade, transportation, and utilities added 36,000 jobs, while professional and business services contributed 11,000. Leisure and hospitality and construction each added 8,000 positions, and financial activities added 7,000. Manufacturing posted a modest gain of 3,000.

On the downside, the information sector lost 9,000 jobs, continuing a pattern of weakness in tech and media. Natural resources and mining declined by 3,000.

Small businesses were a standout performer, with firms employing fewer than 50 workers adding 67,000 jobs — more than half of all new positions. Establishments with 1 to 19 employees alone contributed 49,000 jobs. Medium-sized businesses (50 to 499 employees) added 17,000, while large firms with 500 or more workers added 40,000.

Long highlighted the significance of small business hiring: “Small businesses were the first to cut back last year, especially after sweeping tariffs went into effect. The fact they are hiring now is a vote of confidence in the economy.”

Wage Growth and Regional Trends

Annual pay for job-stayers held steady at 4.4% year-over-year, unchanged from April. Job-changers saw wage growth of 6.5%, down slightly from 6.6% in the prior month. The highest pay growth for job-stayers was in financial activities (5.1%) and manufacturing (4.8%), while small firms with 1-19 employees reported the lowest pay growth at 2.5%.

Regionally, the West led with 45,000 jobs added, followed by the Northeast at 35,000, the South at 23,000, and the Midwest at 21,000. The South Atlantic was the only subregion to post a decline, losing 12,000 jobs.

Implications for the Federal Reserve

The solid jobs data arrives ahead of the Federal Reserve’s next policy meeting on June 16-17. Markets have priced in an unchanged federal funds rate in the 3.5%-to-3.75% target range, and the stronger-than-expected employment figures may reduce pressure on the central bank to consider rate cuts.

Wall Street now turns its attention to the Bureau of Labor Statistics nonfarm payrolls report due Friday, which will include public-sector employment and can differ notably from ADP’s private-sector data. Economists expect the government report to show an increase of approximately 85,000 jobs, according to Bloomberg.

What to Watch

The May ADP report offers an encouraging snapshot of labor market resilience, but several questions remain. Will the official BLS data on Friday confirm the positive trend? How will the Federal Reserve interpret the mixed signals of steady hiring alongside persistent wage growth? And can small business hiring momentum be sustained amid ongoing trade policy uncertainty?

The next ADP National Employment Report is scheduled for release on July 1, 2026.