MW: U.S. private sector adds 38,000 jobs in May: ADP
Economists had predicted a gain of roughly 175,000
By Greg Robb , MarketWatch
WASHINGTON (MarketWatch) — Private-sector employment growth decelerated sharply in May, according to Automatic Data Processing Inc.’s employment report released Wednesday, in another possible sign of a sputtering recovery.
Employment in the nonfarm private business sector rose a seasonally adjusted 38,000 in May, well below the 175,000 gain expected by economists. In April, private payrolls increased 177,000, ADP said.
“This is exceptionally weak,” said Eric Green, chief market economist at TD Securities Inc. in New York.
The ADP report confirmed fears that the labor market is weakening. Weekly jobless claims have risen sharply over the past month, but analysts had been unsure how much weight to put on the data, given technical factors.
Futures on the Dow Jones Industrial Average DJM11 -0.38% added to losses after the ADP report was released, while the 10-year Treasury yield UST10Y -1.60% touched the 3% level.
More details
In May, employment in the service-producing sector rose 48,000, compared with a 141,000 gain in April, according to ADP.
Employment in the goods-producing sector fell by 10,000 after a 36,000 gain in April.
In May, employment fell by 19,000 among large businesses, but gained 30,000 among medium-sized businesses and 27,000 among small businesses.
On Friday, the government will report on May’s nonfarm payrolls, which also include government workers. Economists polled by MarketWatch are looking for a gain of 175,000 in payrolls and for the nation’s unemployment rate to tick lower to 8.9% from 9.0% in April.
This would mark a slowdown from the healthy 244,000 jobs added in April.
Given the weak ADP number, some analysts are now expecting a much smaller gain in the government report.
“At face value, it would suggest that private payrolls are likely to be around 100,000,” Green said in a note to clients.
Elsewhere Wednesday, outplacement consultancy firm Challenger Gray & Christmas Inc. reported that planned layoffs were 37,135 in May, down 4.3% from the prior year.
