Private payrolls miss expectations as companies can't find enough people to hire

  • Jobs in the U.S. grew by 177,000 in June, ADP and Moody’s Analytics say, while economists polled by Thomson Reuters expected a gain of 190,000.
  • Growth for the previous month, however, was revised up by 11,000 to 189,000.
  • The report comes a day before the U.S. government’s monthly nonfarm payrolls report for June.

Private payrolls grew at a disappointing rate last month as businesses struggled to find enough new hires, ADP and Moody’s Analytics said Thursday.

Jobs in the U.S. grew by 177,000 in June, the report said, while economists polled by Thomson Reuters expected a gain of 190,000. June also marked the fourth straight month of jobs growth below 200,000. Jobs growth for the previous month, however, was revised up by 11,000 to 189,000.

“Business’ number one problem is finding qualified workers,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement. “At the current pace of job growth, if sustained, this problem is set to get much worse. These labor shortages will only intensify across all industries and company sizes. ”

Medium-size businesses, which employ 50 to 499 people, added 80,000 payrolls in June, while large businesses added 69,000 jobs. Small businesses, which employ one to 49 people, saw payrolls increase by 29,000.

Service providers added 148,000 payrolls, led by gains in education and health as well as leisure and hospitality. Education and health services payrolls grew by 46,000 jobs last month while leisure and hospitality jobs grew by 33,000. Information technology, however, saw a contraction of 2,000 jobs in June.

The goods-producing sector, meanwhile, added 29,000 jobs, led by gains in construction and manufacturing of 13,000 and 12,000, respectively.

The gains come amid concerns that a tight jobs market could put upward pressure on wages and generate an inflation spike that would force the Federal Reserve to raise interest rates faster than the market anticipates.

The report from ADP and Moody’s comes ahead of the U.S. government’s monthly nonfarm payrolls report, which is scheduled for release Friday at 8:30 a.m. ET.

Correction: An earlier version misstated Friday's release time for the nonfarm payrolls report. It is 8:30 a.m. ET.