(Bloomberg) -- Small companies have shed jobs in three of the last four months, with some indication that this vital pillar of the US economy is feeling the pinch of higher borrowing costs.
Firms with fewer than 50 employees have lost almost 300,000 jobs since February, data from the ADP Research Institute showed on Thursday. Some 91,000 of the losses came in May.
Some of that may have come from a competition for workers to fill the record levels of job openings seen nationwide in recent months, especially as many jump to bigger companies that can offer more competitive pay and benefits. But other data suggest that the Federal Reserve’s monetary-tightening campaign may also be having an impact.
Construction and other sectors that tend to be more sensitive to changes in interest rates saw more job-cut announcements in May than in the previous four months combined, Challenger, Gray & Christmas, Inc. -- an outplacement and business-coaching firm -- reported Thursday.
Two-thirds of job losses since February have been at firms with fewer than 20 employees, according to ADP. That category has also seen the longest streak of monthly declines in payrolls since before the onset of Covid-19. More broadly, US companies of all sizes in May added the fewest jobs since the pandemic recovery began.
“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, ADP’s chief economist.
Read More: US Companies Add Fewest Jobs of Pandemic Recovery, ADP Data Show
ADP data showed that construction jobs contracted in May for the first time in 15 months. That’s amid evidence that higher mortgage rates are beginning to impact the housing market. Both housing starts and permits fell in April, according to the Census Bureau.
The ADP report is not always a reliable predictor of the far-more-widely watched monthly employment report from the government’s Bureau of Labor Statistics, which is due on Friday.
Read More: US Labor Market to Show Emerging Dichotomy of Tightness, Risks
©2022 Bloomberg L.P.