Private sector employment increased by only 37,000 jobs in May, payroll giant ADP reported Wednesday, down from a revised figure of 60,000 in April, while annual pay increased 4.5% year over year.

The professional and business services sector, which includes accounting and tax preparation services, lost 17,000 jobs, although the financial activities sector, which includes banking,  gained 20,000 jobs. The goods-producing sector lost 2,000 jobs.

“May job growth slowed for the second straight month, and this is after a strong start to the year where hiring was really solid, we’re seeing that same hiring lose momentum,” said ADP chief economist Nela Richards during a conference call Wednesday with reporters. 

“New hiring is at the lowest level we’ve seen since March of 2023 when the economy shed 52,000 jobs,” she added. “I highlight that because we all know that the labor market has stayed strong despite that 2023 loss, and so the weak numbers we’re seeing now do not point to a labor market that’s collapsing, but there is hiring hesitancy that’s slowing the additional jobs growing. Most of the slowdown in hiring in May from April is coming from the goods side.” 

The slowdown in hiring was particularly apparent at small businesses and large companies. Small businesses with between one and 19 employees lost 6,000 jobs last month, and businesses with between 20 and 29 employees lost 7,000 jobs. Large companies with 500 employees or more lost 3,000 jobs. Medium sized businesses with between 50 and 249 employees gained 51,000 jobs, although those with between 250 and 499 employees lost 2,000 jobs.

Year-over-year pay growth for people who stayed in their jobs was 4.5%, while pay for those who changed jobs rose 7% in May, which was unchanged from April’s revised figure. In professional and business services, the figure was 4.2% for job stayers.

“Hiring hesitancy persists due to downbeat consumer sentiment and trade policy uncertainty,” said Richardson. “Small firms and low-paid workers seem to be particularly vulnerable to this uncertainty. Small firms have generally thinner margins. They have less options in terms of capital markets, and they are more likely to be dependent on bank loans at the current interest rates.”

ADP is also seeing more “boomerang hires” in which former employees are rehired by the same company, at 35% in March, compared to the typical figure of 31% of new hires. “That’s a pretty strong uptick, according to this data, and that is consistent with firms that are trying to be more cautious in their hiring,” said Richardson. “They want to know that they can onboard a former employee more quickly. That employee knows the ropes, they know the culture, they can get the efficiency and productivity they need on day one, and so that’s why we think this hiring hesitancy has missed that firms are leaning on boomerang hires more than they have in the past.”

Overall, people are also working less, she noted. “We saw a tick down in average hours this month, 34.3 in May, versus just slightly higher, 34.5 in April,” said Richardson. “But layoffs are certainly still quite low. So if you put all this together, the key takeaway is a slowdown in hiring momentum, but still a labor market that’s in good enough shape to support consumer spending and provide the Fed the latitude to stay pat on rates while it continues to decipher its inflation outlook.”

Advisory and audit solutions provider Fieldguide released Field Agents for Financial Audits, which comes with an agentic AI “Audit Testing Agent” to automatically execute the testing workflow end-to-end. 

Specifically, the new Audit Testing Agent automates the process of matching client evidence to samples, extracting and validating key data from documents, and annotating and documenting test results. The Audit Testing Agent supports a wide variety of document-based audit tests, including revenue cut-off, expense verification, unrecorded liability testing, and fixed asset additions. 

It is being rolled out as an enhanced feature of Fieldguide’s existing audit platform, meaning current Fieldguide customers can now access its capabilities. Fieldguide CEO Jin Chang, in an interview, described the new offering as a true end-to-end audit solution that encompasses the entire engagement lifecycle. He contrasted it with similar products in the market, which he said are more like point solutions that handle only one or two steps in the process or are meant for very specific applications like invoice testing. 

“When we talk about agents, we think of agents as a more holistic, multistep workflow approach,” he said. “Our argument is actually that many solutions in the market are not quite agentic. They’re more [like the] AI workflows that Fieldguide has already been building.”

He noted that many solutions will surface discrepancies and possibly make suggestions for manual adjustment. In contrast, he said, Fieldguide’s new AI will go beyond these steps and do things like suggest follow-up questions to clients, draft the communication, evaluate the client response, perform a quality check on the new evidence provided by them, and “connect the dots back to what the auditor is testing for.” 

“By the time the response gets back to the audit team, Fieldguide AI has already pre-tested for quality after evidence and responses come back [to them]. Our agents will test again, document the results, and ultimately the results that are documented flow all the way through to the end financial statement reports,” said Chang. 

He noted that this approach still retains a human in the loop philosophy, which means it’s not actually initiating the client communications with no supervision. While theoretically it could act much more on its own, he said CPA firms are not yet comfortable with that level of independent action from their tools. He contrasted this with other industries, such as software development, where agents are being built with a significantly higher degree of autonomy. Still, this does not mean the AI sits idle waiting for the human to interact with it. Even with this more controlled approach, the agents are still performing some tasks independently. 

“Fieldguide field agents can be autonomous at a very extreme end,” said Chang. “However we need to make sure to meet CPA firms where they are in their AI transformation journey. … What we found is that current levels of comfort in the industry [necessitates] a human in the loop approach where our agents are suggesting next steps and doing proactive analysis. For example when the client uploads evidence, our agents are [performing this analysis without] waiting for the auditor to check. I would say we are about halfway in the journey of more full autonomy, mostly because the level of comfort in the industry is at this current place.” 

Understanding that audit methodologies can vary greatly, the solution sports a high level of customization at multiple levels. This includes the ability for users to set their own materiality thresholds along with their own risk preferences and other best practices. Once set, the AI will use reinforcement learning to better understand how the auditor does things and match itself to their habits. 

“We have customization at every level: firm, practice, partner and down to per engagement preferences too, because we found that even with the same partner, two different clients, he or she may prefer a different way of doing things too,” said Chang. “So what we have incorporated is reinforcement learning at the engagement level, at the audit level, so that the client specific preferences continue on a year to year basis.”

Chang said he is “very confident” in the quality of the AI’s outputs, saying they had to design with quality in mind: while consistent accuracy is important for everyone, it is “non-negotiable” for audit professionals. This quality is at least partially driven by what he said was a proprietary evaluation framework that generally involves a series of specialized LLMs monitoring the outputs of the primary LLM for errors and exceptions it may have missed. Using this framework as a check on accuracy, Chang said the AI has been able to not only perform tests much faster than humans, but it has also been able to find errors that human teams made in previous audits. 

“Fieldguide’s goal is to enhance the quality of audits. We want to help CPA firm partners sleep better at night too, knowing that their audit quality is market leading, not just [producing] efficiencies at the margins. We take a lot of pride in the quality of our AI outputs. We actually would love to see other AI players in the space care more about quality, not just speed. We think that’s just better for the market,” he said. 

While some developers take the approach of having the LLM simply interpret and communicate the calculations made by more deterministic AIs, Fieldguide has the LLMs themselves doing the work, with the specific task matched to the model best equipped to perform it. By giving them access to the right tools, said Chang, LLMs can carry out a wide variety of tasks on their own. 

“Based on our evaluations, certain LLMs tend to be better at math and other very deterministic use cases, whereas other LLMs are better at creativity or understanding documents or images and so on. I will note that anyone who makes blanket statements around LLMs not being good at one particular thing, I would argue, is not doing a proper evaluation across other LLMs,” he said. 

In general, client data is encrypted and stored in Fieldguide’s secure AWS environment. In some cases, when working with very large firms, they will work through their own cloud infrastructure instead, but Chang noted this is more of a premium enterprise service for international firms with global mandates.

Chang added that Fieldguide is ISO 27001 certified, completes annual SOC 2 reports, and will soon be ISO 42001 certified as well. 

He estimated that, for a mid-sized firm of 100 professionals, implementation time would be between three to four weeks; for a larger firm it might be between three to nine months, depending on the scale of the rollout. 

Pricing is generally per-engagement, as the intention is to help CPA firms be more efficient. He argued that per-seat pricing disincentivizes efficiency, as the vendor makes more money the more people use the product. The purpose of this new solution, said Chang, is to enable firms to grow more without having to hire more, a goal that would be at odds with a per-seat pricing plan. 

“A lot of CPA firms who’ve been using our generative AI features the last several years are now reaching a point where they could use another step change in human productivity and quality. … The firms upgrading to our Field Agent solution can grow the top line without necessarily growing headcount one to one,” he said. “Our goal is to help CPA firms create nonlinear growth with revenue compared to headcount.” 

Senate Republican Leader John Thune said President Donald Trump’s giant fiscal bill is unlikely to repeal the estate tax.

“I’d love to get rid of it,” Thune told reporters Wednesday, adding that senators had considered repealing the tax. “I don’t think it’s probably likely to happen here.”

Thune has been a vocal critic of the 40% estate tax paid by the wealthiest U.S. individuals when they die. The South Dakota Republican has assailed the levy, which he says harms family-owned businesses and farms.

Thune told reporters he anticipates the Senate version of the bill will mirror the House’s plan. The legislation permanently increases the estate tax exemption to $15 million for individuals and $30 million for married couples, with future increases tied to inflation.

Thune’s remarks are a concession that Republicans are constrained by budgetary rules that limit the overall size of the bill. The legislation calls for a renewal of Trump’s 2017 tax cuts and includes the president’s campaign promises for no taxes on tips and overtime pay. 

The fiscal limitations mean that Republicans are unlikely to pass all their tax priorities, despite controlling Congress and the White House.

The estate tax affects only a small segment of taxpayers, but has gained political significance with Republicans branding it a “death tax” and saying it inhibits farmers and other small business owners from passing on their assets to their children. In 2022, 3,170 estates — less than 0.1% of Americans — paid estate tax at death, according to Internal Revenue Service data. 

Current estate tax rules mean that an individual’s estate can pass up to $13.99 million tax-free on to their heirs, or twice that for a couple. The top tax rate is 40% on assets, though many billionaires and other wealthy people have long exploited legal loopholes to avoid paying it.