June private payrolls fell short of forecasts, adding fresh uncertainty to the Fed's rate outlook for brokers
Private sector hiring slowed more than expected in June, with ADP reporting 98,000 new jobs added, a miss that may give the Federal Reserve further justification to keep rates on hold as it navigates sticky inflation and an increasingly narrow labor market.
The ADP National Employment Report, released Wednesday, showed seasonally adjusted private employment growth of 98,000 for the month, down from 122,000 in May and short of the Dow Jones consensus estimate of 110,000. The report is produced by ADP Research in collaboration with the Stanford Digital Economy Lab.
The report precedes Thursday's official nonfarm payrolls count from the Bureau of Labor Statistics (BLS), where Wall Street expects 115,000 new positions and an unemployment rate holding steady at 4.3%.
"The pace of hiring is telling a story of both supply and demand. We know it's taking people longer to find work, but there also are signs of labor supply constraints in certain industries," said Dr. Nela Richardson, chief economist at ADP. "For now, the overall effect is a slowdown in job creation."
What the June data shows
Nearly half of the month's gains, or 48,000, came from education and health services, sustaining the narrow growth pattern that has defined much of 2026. All but 2,000 of the new positions were in services.
Trade, transportation, and utilities contributed 15,000; financial activities added 14,000; and other services gained 8,000.
Natural resources and mining was the only sector to shed workers, losing 5,000 positions. Leisure and hospitality, a traditional gauge of consumer confidence, added just 2,000, marking yet another soft month for the sector amid rising borrowing costs.
Small businesses drove most of the hiring. Establishments with fewer than 50 employees added 53,000 jobs, while companies employing 500 or more gained 25,000.
Annual pay for job-stayers held steady at 4.4%, while job-switchers saw pay growth accelerate to 6.6%.
Marty Green, Principal at Polunsky Beitel Green, discusses why a more flexible Federal Reserve approach could help the central bank respond to economic changes while influencing the outlook for mortgage rates and housing markets.https://t.co/BQ4G40R39M
— Mortgage Professional America Magazine (@MPAMagazineUS) June 22, 2026
A muddied path for mortgage rates
The ADP miss arrives at a delicate moment for the market. As MPA has reported, mortgage rates climbed for the second straight week, ahead of the FOMC's next scheduled policy decision, with the 30-year fixed averaging 6.52% as of the week ending June 12, according to Freddie Mac.
The Fed's benchmark rate sits between 3.50% and 3.75%, and a Reuters poll published last month found that 72 of 102 economists expect no Fed rate moves for the rest of 2026, a figure shaped in part by consumer price index (CPI) inflation running at 3.8%, its highest reading since May 2023.
Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association (MBA), has drawn a hard line on the rate outlook. "MBA continues to anticipate that the Fed's next move will be a rate hike, and that means mortgage rates are unlikely to drop anytime soon," he said following May's BLS employment release.
Meanwhile, the Bank of America has reversed its Federal Reserve outlook, now projecting three consecutive rate hikes totaling 75 basis points before year-end, with no prospect of cuts until 2028.
Thursday's BLS nonfarm payrolls report will be the definitive labor market signal heading into the FOMC's next scheduled meeting — and one of the most closely watched data releases of the year for mortgage professionals tracking any shift in rate direction.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
