ADP says firms hired 201,000

U.S. la­bor mar­ket posts strong gains af­ter a rough win­ter. Trade deficit plunges.

Los Angeles Times - - BUSINESS BEAT - By Dean Stark­man dean.stark­man@la­times.com

The pri­vate sec­tor added 201,000 jobs in May, a ro­bust im­prove­ment over the previous month and a sign the eco­nomic re­cov­ery is get­ting back on track, ac­cord­ing to pay­roll firm Au­to­matic Data Pro­cess­ing Inc.

And a Com­merce De­part­ment report show­ing that April’s trade deficit plum­meted 19% in April pro­vided fur­ther ev­i­dence that the ef­fects of the West Coast port dis­pute dur­ing the win­ter were short-lived.

The de­part­ment re­ported that the na­tion’s trade deficit fell in April to $40.9 bil­lion from $50.6 bil­lion in March. Longer term trends were largely un­changed, with the trade deficit show­ing a mod­est $500mil­lion de­crease for the first three months this year.

In its monthly jobs report, ADP said small busi­nesses with 50 or fewer em­ploy­ees led the way, adding 122,000 of the new jobs, while firms larger than 1,000 em­ploy­ees con­trib­uted only 16,000. The job gains were over­whelm­ingly in the ser­vice sec­tor, which ac­counted for 95% of the new jobs.

The May report on non­farm, pri­vate sec­tor pay­rolls in­creased from April’s re­vised fig­ures of 165,000 new jobs and in­di­cated that an eco­nomic con­trac­tion in the first quar­ter should be re­versed in the sec­ond quar­ter end­ing this month.

“The job mar­ket posted a solid gain in May,” said Mark Zandi, chief econ­o­mist at Moody’s an­a­lyt­ics, which pre­pared the report in col­lab­o­ra­tion with ADP. “Em­ploy­ment growth re­mains near the av­er­age of the past cou­ple of years. At the cur­rent pace of job growth, the econ­omy will be back to full em­ploy­ment by this time next year.”

The ADP find­ings are watched as a harbinger of the La­bor De­part­ment’s com­pre­hen­sive monthly report to be re­leased Fri­day. ADP’s job-growth fig­ures for April were lower than the La­bor De­part­ment’s, and econ­o­mists gen­er­ally cau­tion against read­ing too much into the firm’s data.

Pa­trick J. O’Hare, chief mar­ket an­a­lyst at briefing.com, said the ADP fig­ures show rea­son­ably ro­bust jobs growth but with some signs that the rate of job creation is slow­ing.

“It’s a good report, but there’s room for it to be bet­ter,” he said, not­ing that the num­bers are un­likely to shift econ­o­mists’ ex­pec­ta­tions for Fri­day’s La­bor De­part­ment report to show a gain of 225,000.

The ADP report comes five days af­ter the Com­merce De­part­ment re­ported that the U.S. econ­omy had con­tracted in the first quar­ter for the sec­ond straight year, shrink­ing at an an­nu­al­ized rate of 0.7%. Econ­o­mists chalked up most of the slow­down to bad win­ter weather and the West Coast ports dis­pute.

In May, the con­struc­tion sec­tor added 27,000 jobs, up slightly from April and March, while trade, trans­porta­tion and util­i­ties, which would have been most af­fected by the port dis­pute, snapped backed smartly, contributing 56,000 of the new jobs, ADP said.

Dan Henry

JOB GAINS in May were mostly in the ser­vice sec­tor, which ac­counted for 95% of the new jobs, ac­cord­ing to ADP. Above, job seek­ers at a ca­reer fair in Ge­or­gia.

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