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Private Sector Jobs Report Comes In Below Expectations

by May 2, 2012, 1:30 pm ET

A disappointing hiring report from payroll processor ADP this morning is fueling fears that the anemic U.S. recovery may be slowing. The company reported April saw 119,000 private sector jobs added, the lowest in seven months and well below the 175,000 average analysts were expecting.

Friday, the U.S. Labor Department issues its monthly employment report. Analysts expect it to show the economy added about 160,000 jobs in April. The ADP report, which can sometimes show sharply different numbers from the official report (due to differences in methodology), is nonetheless seen as an early indicator of the government numbers and hiring trends. That’s why the financial markets reacted to the numbers by selling, sending stocks lower before regaining most of the lost ground.

A similar employment surprise last spring all but stalled job growth for months. From May through August, job growth averaged 80,000 a month. In the first four months of 2011, growth averaged 228,000 jobs.

Economist Paul Ashworth, in a note to clients of Capital Economics, quoted by the Washington Post, said the ADP report “will renew fears of another spring slump in the labor market.” However, “we would still expect employment growth to start picking up again in a few more months.”

According to ADP, and its partner, Macroeconomic Advisers, small and mid-sized businesses — those with fewer than 500 employees — accounted for most of the new jobs in April. The biggest employers added just 4,000.

All the gains came in the service sector, which grew by 123,000 positions. Those gains were offset by losses in the good-producing sector, which declined by 4,000 jobs. Manufacturing, part of the good-producers, lost 5,000 positions.

Yesterday, the Institute for Supply Management said its index of manufacturing activity reached the highest point since June, coming in at 54.8 in April. It was the 33rd consecutive month of expansion for the manufacturing sector, the ISM said, noting, “Sixteen of the 18 industries reflected overall growth in April, and the New Orders, Production. and Employment Indexes all increased, indicating growth at faster rates than in March.”

Another indicator, the Help Wanted OnLine data from the Conference Board, said the number of jobs posted online in April increased by almost 91,000. That was a sharp drop from the 246,000 additional jobs posted in March, but was still higher than in all but three of the past 12 months. “The April rise is the fifth consecutive monthly rise and has led to the series’ highest level to date,” said the Conference Board.

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