Job growth on the rebound in ADP tally
ADP’s report, however, raises some concerns because it showed weak hiring in construction and retail last month as well.
Payroll processor says private sector added 177,000 jobs in April
Many economists expect Friday’s employment report to show a healthy rebound in job growth following weather-related volatility in the first quarter.
Payroll processor ADP said Wednesday the private sector added 177,000 jobs in April, slightly above the 175,000 economists expected. Economists expect the Labor Department to tally 190,000 payroll gains in the public and private sectors on Friday.
ADP attempts to predict the Labor report and frequently spots similar broad trends. But it often differs substantially. In March, for example, ADP recorded a booming 263,000 new privatesector jobs. Labor tallied just 89,000 private jobs and 98,000 total, including government positions. ADP’s estimates also have been significantly lower than Labor’s.
Many economists believe Labor’s report will show a solid comeback in April. After unusually mild temperatures early in the year pulled forward hiring in areas such as construction and retail, experts weren’t surprised by the pullback in March, which was also marred by foul weather in the Midwest and Northeast. A late Easter also curtailed hiring in March.
By April, the weather-related gyrations were history, and the Easter holiday should have bolstered retail and other industries.
ADP’s report, however, raises some concerns because it showed weak hiring in construction and retail last month as well. That trend suggests the offsetting reaction to the mild weather early in the year was still a factor. Construction firms cut 2,000 jobs, and trade, transportation and utilities — which includes retail — added just 5,000.
But Ian Shepherdson, chief economist of Pantheon Macroeconomics, notes that ADP’s estimate model incorporates the prior month’s Labor count, and so it may be mistakenly accounting for a negative weather impact.
Other indicators suggest a turnaround in Friday’s jobs tally is likely.
Employment networking site LinkedIn said Wednesday that its jobs report showed April was the strongest month for hiring since June 2015.
One worrisome sign, however, is that just three sectors — manufacturing; aerospace, automotive and transport; and software — fueled the gains, while hiring was down in the 10 other industries.
Meanwhile, initial jobless claims, a barometer of layoffs, have fallen back near four-decade lows after edging higher in March.
A second consecutive weak jobs report Friday likely would lower the odds of an anticipated Federal Reserve interest rate hike in June, especially in light of the sluggish first-quarter economic growth the government reported last week.
But Jim O’Sullivan, chief U.S. economist of High Frequency Economics, said the Fed also would look closely at other labor market indicators, including jobless claims and surveys of the manufacturing and service sectors.
The Fed has raised the benchmark short-term rate just three times over the past decade but twice since December. Fed officials have signaled two more hikes are likely this year.