In what may be the first sign of cracks in a resilient job market, private employers in the U.S. shed an estimated 33,000 jobs in June, according to a report released Wednesday by payroll processing company ADP. Economists polled by Dow Jones had predicted an increase of 100,000 jobs for the month.

June’s swoon marks the first decline in ADP payrolls since March 2023, when the private sector reduced headcounts by 53,000.

For people who stayed in their current jobs, year-over-year pay growth was 4.4% in June compared to 4.5% in May, according to ADP. Wages for people who changed jobs rose 6.8% year over year in June, a slight decrease from May’s 7% yearly pay growth.

“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” ADP Chief Economist Nela Richardson said in a press release. “Still, the slowdown in hiring has yet to disrupt pay growth.”

The unexpectedly dour payroll data ramps up the focus on the more comprehensive jobs report from the U.S. Bureau of Labor Statistics (BLS), which will be released a day early on Thursday in advance of the Fourth of July holiday. Economists surveyed by Dow Jones are expecting the BLS report to show nonfarm payroll growth of 115,000 jobs and a slightly higher unemployment rate of 4.3%, according to CNBC.

Service providers shed the most jobs in June, according to ADP, led by professional and business services with 56,000 job reductions and education and health services with 52,000 cuts. By contrast, the leisure and hospitality sector added 32,000 positions in June and the manufacturing sector had a net gain of 15,000 jobs. Construction companies added 9,000 jobs last month.

ADP found that small businesses of 1 to 49 employees cut an estimated 47,000 jobs; medium-sized establishments of 50 to 499 employees lost 15,000 positions; and large employers with more than 500 employees added 30,000 jobs in June.

Regionally, the Midwest and West saw respective reductions of around 24,000 and 20,000 positions, while employers in the Northeast reduced payrolls by 3,000 jobs. The South experienced 13,000 job gains.

Overall, the ADP jobs numbers are added ammunition for those calling for a Federal Reserve interest rate cut in July. The Fed is more likely to cut rates when the labor market weakens, though it is less likely to do so when inflation heats up.

As of Wednesday afternoon, interest-rate futures traders put the likelihood of a July rate cut at about 25%, according to the CME FedWatch tool. Last week, the odds stood around 20%.

Fed prognosticators will also be keeping a close eye on the next BLS consumer price index inflation report, which is set for release on July 15. The Fed’s next monetary policy meeting is July 29-30.