US Dollar Lower as Services Sector Contracts and Private Hiring Slumps

By Quasar Elizundia, Expert Research Strategist, Pepperstone

June 5, 2025 

“The US Dollar weakened on Wednesday after a disappointing batch of economic data cast fresh doubt on the strength of the US economy and the pace of job creation. The ISM Services PMI unexpectedly fell into contraction territory in May, registering 49.9, its first sub-50 reading in almost a year and well below consensus expectations of 52. The decline was driven by a sharp drop in new orders and stagnation in business activity, driven by ongoing trading tensions.

Adding to the bearish tone, the ADP private payrolls report showed that the US economy added just 37,000 jobs in May, the lowest in over two years and far short of market expectations for 115,000.

These sluggish results come just one day after the JOLTS report suggested underlying labor demand remained strong. Together, the data paint a mixed but increasingly fragile picture of the US economy, opening the likelihood of a dovish Fed stance and weighing on the greenback.

Markets now shift focus to Thursday’s jobless claims and Friday’s Non-Farm Payrolls for confirmation on whether the latest softness reflects a temporary pause or a more durable slowdown.”