Private-sector hiring in the U.S. slowed to its weakest pace since early 2023 in May, according to data released by ADP, raising concerns about the impact of President Donald Trump’s trade war on the world’s largest economy. Despite the discouraging figures, stock markets defied logic by advancing. The employment data showed a bleak picture: the private sector added only 37,000 jobs last month, a significant drop from 60,000 in April and well below Briefing.com’s expectation of 115,000 new jobs. Trump immediately reacted on Truth Social, criticizing Federal Reserve Chair Jerome Powell, writing: “‘Too Late’ Powell must now CUT RATES,” intensifying pressure on the independent central bank to lower interest rates. This pressure comes at a delicate time for U.S. monetary policy. While the Fed has begun reducing rates from recent highs, officials have proceeded cautiously while monitoring persistent inflation. The Congressional Budget Office’s analysis revealed that the Republican-backed legislative proposal to cut taxes and reduce certain federal programs would increase national debt by $2.4 trillion over the next decade. This nonpartisan report intensifies the debate over the potential fiscal consequences of Trump’s domestic agenda. ADP’s data highlighted a complex U.S. labor market. Nela Richardson, ADP’s chief economist, noted that “hiring is losing momentum” after a strong start to the year, adding that wage growth remained “little changed in May.” Service sectors like leisure, hospitality, and finance still showed gains, but goods-producing industries experienced net job losses, with declines in mining and manufacturing. Some service sectors also saw job losses, including trade, transportation, business services, and education or health services. Wage growth for those who kept their jobs remained little changed at 4.5%, while job switchers saw wage growth of 7.0%. Paradoxically, U.S. stock markets advanced despite discouraging employment growth data, reviving economic fears. Investors also overlooked Trump’s harsh words on China and his doubling of global steel and aluminum tariffs. Gains in U.S. stock futures evaporated after the data release, but sentiment recovered by the opening bell, with all three major Wall Street indices rising. “The report… sparked some growth concerns that led to instinctive selling in the stock futures market and some impulsive buying in the Treasury market,” explained Briefing.com analyst Patrick O’Hare. O’Hare noted that concerns about slow growth could increase expectations of Fed rate cuts, which tend to calm market nerves. In Asia, Seoul’s stock market rose over 2%, entering a bull market after gaining more than 20% from its recent low in April, following Lee Jae-myung’s victory in South Korea’s early presidential elections. The won appreciated against the dollar. European markets ended mixed. Germany’s stock market rose 0.8% after the government announced a broad package of corporate tax cuts to boost investment and pull Europe’s largest economy out of recession. Paris’ stock market rose 0.53%, London 0.16%, Milan 0.02%, and Madrid lost 0.19%. The labor data came amid an escalation in Trump’s trade war. The president doubled global steel and aluminum tariffs to 50%, intensifying his trade conflict with both adversaries and allies. Tensions between the U.S. and China have risen again after Trump accused Beijing of violating an agreement that led to reduced reciprocal tariffs between the two largest economies. With Trump possibly speaking to Chinese President Xi Jinping this week, the U.S. leader said on Truth Social that it was “extremely difficult to make a deal” with his counterpart. Carl Weinberg, chief economist at High Frequency Economics, warned about broader implications: “This could be the tip of an iceberg, but it could also be a false start. Whether today’s report is accurate or not, traders and investors will read today’s number as a dark outcome for trade.” Analysts are closely monitoring U.S. economic data this week, with official employment figures scheduled for Friday. While ADP figures can diverge from government numbers, experts are watching the effects of Trump’s global tariffs as they ripple through the world’s largest economy. The OECD cut its growth forecast for the U.S. and the rest of the world, blaming the consequences of the tariffs.
— new from Infobae
