Private sector employers added a robust 204,000 jobs in April, according to payroll giant ADP, as the economy continued to expand with the help of tax cuts.
ADP found that small businesses added 62,000 jobs, including 31,000 at businesses with between one and 19 employees, and 31,000 at businesses with between 20 and 49 employees. Midsize businesses with between added 50 and 499 employees added 88,000 jobs. Large businesses gained 54,000 jobs, including 12,000 at businesses with between 500 and 999 employees, and 42,000 at companies with 1,000 employees or more.
The service-providing sector added 160,000 jobs in April, including 58,000 in professional and business services, which includes accounting, tax preparation and other services. The financial activities sector added 7,000 jobs. The goods-producing sector added 44,000 jobs. Franchise businesses lost 10,600 jobs, however.
“The labor market continues to maintain a steady pace of strong job growth with little sign of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “However, as the labor pool tightens it will become increasingly difficult for employers to find skilled talent. Job gains in the high-skilled professional and business services industry accounted for more than half of all jobs added this month. The construction industry, which also relies on skilled labor, continued its six month trend of steady job gains as well.”
Mark Zandi, chief economist of Moody’s Analytics, which compiles the monthly national employment report with ADP, sees no slowing in job creation and a very low level of layoffs. “Hiring is strong,” he said during a conference call with reporters Wednesday. “It probably would be stronger if it not for the record number of open job positions out there that are continuing to rise.”
However, he does see some risk of the economy overheating as the unemployment rate gets closer to 3 percent. “We will see a lot of job growth and broader economic growth over the next year just because of the very large deficit financed tax cuts and government spending increases coming into the economy, but it is going to result in unemployment in the 3’s and the risk of overheating is consequential and rising,” said Zandi. “It will create a problem at some point when the fiscal stimulus ends.”
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