Employment at US companies fell in June for the first time in more than two years, reflecting a drop in services payrolls that may raise concerns about a more pronounced labor market slowdown.

Private-sector payrolls decreased 33,000 last month after a downwardly revised 29,000 gain in May, according to ADP Research data released Wednesday. None of the economists in a Bloomberg survey of economists expected a decline.

“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” Nela Richardson, chief economist at ADP, said in a statement.

Treasury yields fell and stock-index futures declined after the figures.

Employers have grown increasingly cautious about the impact from the Trump administration’s trade policy, and are doubling up efforts to reduce costs. Companies are focused on bringing headcounts more in line with economic activity that has slowed this year.

Service providers reduced payrolls by 66,000 in June, largely due to declines in professional and business services as well as health care and education. Payrolls climbed in manufacturing, construction and mining. Employment fell among small- and medium-size businesses.

Based on the ADP report, average payrolls growth over the past three months slowed to 18,700 in May, the weakest since early in the pandemic. Other data indicate it is taking longer for unemployed people to find a new job, while figures from placement firm Challenger, Gray & Christmas show hiring plans in June were the second-weakest in data back to 2004.

Data from The Conference Board show the share of consumers who said jobs were plentiful in June declined to a more than four-year low.

Despite signs of a downshift, Federal Reserve Chair Jerome Powell has repeated that the labor market remains solid. Fed officials have refrained from lowering interest rates this year as they wait to see the impact of tariffs on inflation.

The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed wage growth cooled. Workers who changed jobs saw a 6.8% increase in pay, while those who stayed put saw a 4.4% gain. ADP bases its findings on payrolls covering more than 25 million US private-sector employees.

The government’s June employment report due Thursday is expected to show the slowest payrolls growth in four months and a slight increase in the unemployment rate to 4.3%.

--With assistance from Georgina Boos.