Businesses added 98,000 jobs in June, ADP says. Labor market is on the mend, but it's still not great.

By Jeffry Bartash

The increase in private-sector hiring in June is the weakest in three months

ADP said U.S. businesses added 98,000 new jobs in June, to mark the smallest increase in three months. The payroll processor said hiring was slow but demand for labor was improving.

"We know it's taking people longer to find work, but there also are signs of labor supply constraints in certain industries. For now, the overall effect is a slowdown in job creation," said Nela Richardson, chief economist at ADP, the U.S.'s largest processor of company payrolls.

Other employment reports suggest the labor market is coming out of a recent slump - job openings have surged and hiring has picked up this year.

Yet the economy still isn't adding many new jobs each month. What's more, a new survey shows that the number of Americans who think jobs are "hard to get" is at a five-year high.

The Federal Reserve is watching employment closely as it debates whether to change a key U.S. interest rate. Right now Fed officials view the labor market as stable and in little need of support.

ADP is a lead act of sorts for the official U.S. employment report due Thursday - a day early this month because of the July 4 holiday. Economists predict a 115,000 increase in new jobs in June based on information collected by the Bureau of Labor Statistics.

Key details: Healthcare providers created about half of the new jobs in June, a big trend in the past two years that shows no sign of abating.

Hiring also picked up in finance, transportation and manufacturing.

The yearly increase in worker pay was flat for the third month in a row, another sign of modest demand for labor. Wages rise more quickly when the job market is hopping.

The ADP and BLS reports can vary widely from month to month, but they move in the same direction over time. The BLS report is more comprehensive and, unlike ADP's, it includes government workers.

Big picture: The labor market is on the mend, but it's still a tough time to find a job for anyone who recently lost one.

The good news is that layoffs are low, and most people who already have a job don't have much to worry about.

What would help the economy and the labor market is an end to the conflict with Iran and a receding rate of inflation, both of which could spur more companies to hire.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to decline in Wednesday trading.

-Jeffry Bartash

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07-01-26 0919ET