ADP Finds Private Sector Added 156,000 Jobs in April

Private sector employers added 156,000 jobs in April, according to payroll giant ADP, in a possible sign of a slowdown in the job market.

Small businesses with 49 or fewer employees added 93,000 jobs in April, about the same number as March. That total included 50,000 jobs at small businesses with between one and 49 employees, and 43,000 jobs at businesses with between 20 and 49 employees.

Midsize businesses with between 50 and 499 employees gained 39,000 jobs in April, a big drop from 66,000 in March. Employment at large companies–those with 500 or more employees–fell to 24,000 in April, compared to 35,000 in March. Large businesses with between 500 and 999 employees added 15,000 jobs, while companies with more than 1,000 employees added only 9,000 jobs this month.

"Despite the softest overall monthly jobs added in three years, small businesses remained an engine for job growth in April,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute, in a statement. “Smaller businesses are less susceptible to global conditions, such as low commodity prices and the strong dollar, that may have caused larger businesses to ease up on hiring.”

Service-providing employment rose by 166,000 jobs in April, down from 189,000 in March. The professional and business services sector, which includes accounting and tax preparation along with other services, gained 27,000 jobs in April, down slightly from 31,000 in March.  The combined trade, transportation and utilities sector grew by 25,000 jobs in April, far lower than the 42,000 jobs added in March. The financial activities sector added only 4,000 jobs. Franchise businesses added 14,100 jobs in April.

Goods-producing employment dropped by 11,000 jobs in April, down from a downwardly revised 5,000 in March. The construction industry added 14,000 jobs in April, which was down from 18,000 in March. The manufacturing industry lost 13,000 jobs in April, after being revised down to -3,000 in March.

Mark Zandi, chief economist of Moody’s Analytics, which compiles the monthly national employment report with ADP, cautioned against jumping to conclusions about the relatively weak job numbers. “The topline number was soft, with 156,000 private sector jobs,” he said during a conference call with reporters Wednesday. “Taken at face value that would suggest some weakening in job growth in the month of April. Job growth has been consistently above 200,000 per month for almost the past five years, so this is on the soft side of that average. I would caution against reading too much into it. I don’t think anything fundamental has changed. I don’t think underlying job growth is materially different. It’s still around 200,000 jobs per month. The other data we've gotten doesn’t indicate any material fundamental change in the job market in April. Most notably, the number of initial claims for unemployment, which is weekly data, looks very good and is low by historical standards, somewhere around 250,000 or 260,0000 per week. Anything around 300,000 per week would be consistent with monthly job growth of 200K.”

He believes that the slow GDP growth and the dip in the stock market earlier this year may have tempered some companies’ hiring plans. However, he is also seeing signs of wage growth in ADP’s separate Workforce Vitality Index report, with job holders seeing wage increases of 4.8 percent on average in the first quarter, compared to 3.8 percent in the first quarter of last year. Zandi expects to see the job market return to what economists consider full employment by late summer, as more unemployed and underemployed workers return to the workforce and find full-time jobs.