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A potential omen for jobs growth

The private sector added just 27,000 jobs in May — the fewest since the economic expansion began — according to the ADP employment report, which tracks the employers of about 24 million workers. The number was way below economists' expectations of 173,000 job gains and a steep drop-off from April's 275,000 increase in jobs.

What's happening: Small businesses — which ADP counts as companies that employ up to 49 people — saw the steepest decline in employment, with payrolls dropping by 52,000, continuing a pattern of pain for smaller companies.

Why it matters: "Smaller firms are more likely to accelerate or slow their hiring decisions in response to economic developments," Luke Tilley, chief economist at Wilmington Trust, tells Axios.

  • "A 25-person company is far more likely to pause than a large corporation with a more bureaucratic structure," Tilley says.
  • Small businesses are also struggling to fill open positions and don't have the resources to compete with larger firms for talent, Mark Zandi, chief economist at Moody's Analytics, tells Axios.

What to watch: The ADP report is seen as a barometer of the official government release that comes later in the week, but it's not perfect. The figures have "under- and overshot the preliminary official private-payroll tally by an average of 83,000 jobs," according to the WSJ.

  • Zandi told reporters that Friday’s jobs report — which, unlike the ADP report, includes government workers — might be more “juiced up” relative to the ADP number as the government ramps up hiring for the 2020 Census.