U.S. small companies cut jobs in May as private sector sees slower job growth amid tight labor market

WASHINGTON, June 2 (Xinhua) -- Private companies in the United States added 128,000 jobs in May, indicating slower job growth in a tight labor market, payroll data company Automatic Data Processing (ADP) reported Thursday.

"The job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late," said Nela Richardson, chief economist at ADP.

Large firms hired 122,000 workers, medium-sized businesses added 97,000, while small companies cut 91,000 employees, the report showed, indicating an unbalanced recovery across different company sizes.

In February and April, small companies also slashed jobs as large firms and medium-sized businesses saw payroll gains, according to the report produced by the ADP Research Institute in collaboration with Moody's Analytics.

Small companies with fewer than 50 employees have lost nearly 300,000 jobs since February, as they have struggled to hire and retain workers who are looking for better pay and benefits in a tight market.

According to National Federation of Independent Business (NFIB)'s monthly jobs report also released Thursday, the labor shortage continues to be a challenge for small businesses with 51 percent (seasonally adjusted) of owners reporting job openings they could not fill in the current period, up four points from April.

The NFIB report said 23 percent of owners reported labor quality was their top business problem, second to inflation, and 12 percent cited labor costs as their top business problem.

"The labor force participation rate is slowly rising but small businesses continue to have a hard time filling their open positions," said NFIB Chief Economist Bill Dunkelberg.

Overall, companies are struggling to hire as labor market supply could not meet demand. The number of job openings decreased by 455,000 to 11.4 million by the end of April, the U.S. Bureau of Labor Statistics reported Wednesday.

The bureau's monthly employment report, however, showed that the number of unemployed persons dropped slightly to 5.9 million in April, indicating there were approximately 1.9 job positions for every unemployed.

In its latest Beige Book released Wednesday, the U.S. Federal Reserve also noted that business contacts tended to cite labor market difficulties as their "greatest challenge," followed by supply chain disruptions.

"Worker shortages continued to force many firms to operate below capacity," the Beige Book said. "In response, firms continued to deploy automation, offer greater job flexibility, and raise wages."

The ADP report also showed that the service sector saw a job gain of 104,000 in May, including 46,000 added in education and health services, while the goods-producing sector added 24,000 jobs.

The April total of jobs added in private companies was revised down from 247,000 to 202,000, according to the report.

The ADP report came one day before the May employment report is to be released by the Bureau of Labor Statistics, which will include employment data from both the private sector and the government.