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The numbers: Private-sector employers hired 275,000 people in April, payroll-processor ADP said Wednesday. That topped economists’ consensus surveyed by Econoday for 180,000 jobs added.
What happened: ADP’s estimate of job gains is designed to give investors an early read on the more closely followed nonfarm-payrolls report from the Labor Department on Friday. However, Mark Zandi, Moody’s Analytics chief economist and architect of the ADP report, cautioned that market participants shouldn’t get too ebullient based on the U.S. employment figures.
“This number overstates the case,” Zandi said on CNBC.
ADP’s increases in April were concentrated in the service sector: it accounted for 223,000 of the jobs added. In fact, only natural resources and mining, and information sectors lost jobs during the month.
Small businesses added 77,000 jobs, medium-size companies added 145,000, and big business accounted for 53,000 of the job gains.
ADP’s number for March, which was much lower than the Labor Department’s, was raised by 22,000 jobs.
See also: Construction hiring is booming — and there still are plenty of available jobs
Big picture: If the consensus forecast for Friday’s Labor Department release is correct – the MarketWatch consensus is for a gain of 210,000, while other forecasts are a bit lower – “that would be consistent with slowing job growth,” Zandi said Wednesday. “Job growth is still strong, but it is definitively slowing, consistent with a broad slowing in the economy.”
What they’re saying: “This is a big surprise, and very hard to square with survey evidence; all the private sector indicators we follow suggest labor demand is running at about 175-to-200K per month,” said Ian Shepherdson, chief economist for Pantheon Macro.
“The ADP report this month appears to be free of obvious distortions – though temperatures were a bit milder than usual – so we can’t just ignore it. The survey is not a reliable indicator of the official payroll numbers every month but the error against our ADP forecast is big enough to move the needle on our estimate for Friday’s official report; we now expect the BLS to report a 240K increase in April payrolls.” That was an increase of 40,000 jobs.
See: Americans say it’s easier to find a job now than at any time in the past 18 years
Market reaction: The 10-year Treasury note TMUBMUSD10Y, -0.97% slid earlier this week despite strong economic reports, likely because investors are betting tepid inflation will keep the Federal Reserve’s hands tied. U.S. stocks DJIA, +0.13% opened higher.
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