Employment growth in the U.S. private sector came in well below analysts' forecasts in May, with data from the ADP National Employment Report pointing to the smallest monthly gain since 2010.
Private sector employers added 27,000 jobs in May, compared with the Econoday consensus estimate of 175,000 jobs.
Gains in April were revised down to 271,000 from 275,000.
"Following an overly strong April, May marked the smallest gain since the expansion began," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. The preliminary reading of a 27,000-job gain was marks the smallest monthly gain since March 2010, the last month private employers shedded jobs.
Labor shortages weighed on job growth at small companies, noted Mark Zandi, chief economist of Moody's Analytics, adding that "layoffs at brick-and-mortar retailers are hurting." Large businesses added 68,000 jobs, medium businesses hired 11,000 people, and small enterprises shed 52,000 jobs.
Service-providing companies hired 71,000 people, while the goods-producing sector shed 43,000 jobs.
Within services, education and health services led the increase with 33,000 additional jobs.
Within the goods-producing sector, construction companies drove the decline with 36,000 job cuts.
Yields on 10-year Treasurys dropped 5 basis points to 2.082% as of 8:34 a.m. ET, shortly after the report was released.