ADP Employment and Services PMI Miss Expectations, Trump Urges Powell: "Must Now Lower the Rate"

TradingKey – Just one day after stronger-than-expected job openings data eased concerns about U.S. economic growth, weak ADP employment figures and a surprise contraction in the ISM services sector reignited fears of a slowdown. President Donald Trump once again pressured Federal Reserve Chair Jerome Powell to cut interest rates immediately.

Data released on Wednesday (June 4) showed that U.S. private payrolls increased by only 37,000 in May—the lowest since March 2023—far below the forecast of 114,000 and revised April figures of 62,000.

United States ADP Employment Change, Source: TradingKey Economics 

Trump took to his social media platform, Truth Social, to vent his frustration: "ADP number out. 'Too Late' Powell must now lower the rate. He is unbelievable. Europe has lowered nine times."

In recent months, Trump has repeatedly pressured Powell to lower interest rates, even going so far as to threaten to fire him.

Another economic report released the same day also pointed to slowing momentum in the U.S. economy amid rising trade tensions. The May ISM Services PMI came in at 49.9, marking the first time in a year that the index fell below the 50 threshold that separates expansion from contraction. This was well below both the prior reading of 51.6 and expectations of 52.

The chair of the ISM survey committee noted that while the contraction wasn't severe, it reflected widespread uncertainty among service-sector businesses, which is making forecasting and planning increasingly difficult.

On Wednesday, U.S. Treasury yields across the 5-year to 30-year spectrum fell by more than 10 basis points, as traders ramped up bets on potential Fed rate cuts later this year.

According to CME FedWatch, markets are pricing in a 56.5% probability of a 25-basis-point rate cut in September, with around a 20% chance of two cuts this year. A second rate reduction could come in either October or December.