Reports Suggest Hiring, Economy May Be Slowing

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May 31, 2012

This morning’s jobs report from ADP is prompting worries that hiring may be slowing, damping hopes that the anemic recovery may be hitting a rough spot, if not stalling.

ADP, which processes payrolls for some 500,000 U.S. firms, said private employment grew by 133,000 jobs in May. The company, and its analytics partner, Macroeconomic Advisers, also adjusted down by 6,000 its initial 119,000 April job estimate.

Economists surveyed by Bloomberg News were expecting the May ADP report to show about 150,000 new jobs. Bloomberg also said the expectation is for the official Labor Department report to show 160,000 new jobs during the month. That report is scheduled to be released tomorrow morning.

“While May’s increase was the twenty-eighth consecutive monthly advance, it nonetheless reflected a notable slowdown in the recent pace of hiring,” said Joel Prakken, chairman of Macroeconomic Advisers.

Nearly all the new jobs came from the service sector, with small and medium companies in the sector — those with fewer than 500 employees — creating all but 15,000. Manufacturing, which had been growing until April, when it lost 6,000 jobs, lost 2,000 more, according to the ADP report.

Other reports also point toward softening growth.

  • Initial claims for unemployment benefits jumped by 10,000 last week to 383,000, a five-week high. A year ago, initial claims for the same week totaled 424,000.
  • The Commerce Department adjusted down its estimate of 1st quarter growth. Now, it estimates that GDP rose by 1.9 percent, down from the first estimate of 2.2 percent, and well below the 3 percent in the 4th quarter of 2011.
  • SHRM’s LINE (Leading Indicators of National Employment) report predicts that hiring during June will slow — somewhat for manufacturing firms, and sharply for the service industry. For the fifth time in six months, the rate will be lower than for the corresponding month last year. Nearly half (49 percent)  the manufacturers in SHRM’s survey expect to hire during the month, compared to only 31 percent of service sector firms.
  • Job openings, which were increasing in each of the last five months, dropped by 46,000 in May, says The Conference Board. Its Help Wanted On-Line data said there 4.71 million jobs posted online during the month. Of that 2.9 million were new, a reduction from April’s 3.12 million new listings.
  • Consumer confidence also slipped during the month. The Conference Board’s index is now at 64.9, down from 68.7 in April.
However, not all the news is downbeat. The Associated Press says economists expect the current quarter to see an annual growth rate between 2 and 2.5 percent. Sales in May were strong, suggesting consumers are continuing to spend as strongly as the did in the 1st quarter when consumer spending grew at an annualized rate of 2.7 percent, the fastest pace since the end of 2010.
Surveying 12 of the top analysts in the country, Business Insider presented each of their predictions for the official jobs growth numbers tomorrow, as well as their commentary on the economy. Their estimates range from a low of 95,000 to the 175,000 from UBS chief economist Mary Harris..
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