Private-Sector Unexpectedly Adds 40,000 Jobs in May
U.S. private-sector employers added 40,000 jobs in May, according to a private report on Wednesday by ADP Employer Services that defied Wall Street's expectations of a fall.
The ADP data release comes ahead of the government's monthly jobs report due on Friday, one of the biggest events on the monthly economic calendar. A Reuters poll shows analysts expect that to show non-farm payrolls fell by 58,000 in May.
Economists' median expectation for the May ADP jobs figure was for a drop of 30,000 jobs, according to a Reuters poll.
However, a separate survey showed U.S. companies' planned layoffs rose 15 percent in May from April to the highest monthly total since December 2005.
In April, ADP said, the private sector added 13,000 jobs, which was revised up from the previously reported 10,000. On Wall Street, stock futures pared their losses after the ADP release. The dollar also trimmed its losses versus the euro and yen .
Government bonds, which usually perform better during weak economic times, shed their earlier gains.
"ADP has been inaccurate of late, overpredicting payrolls," said Cary Leahey, economist and managing director at Decision Economics in New York.
"That said, the increase of 40,000 jobs in the report will let the market conclude that the May payroll figure due this Friday will be flattish to slightly down, which would be stronger than expected and that explains this mild selloff in the bond market."
The report by ADP Employer Services was jointly developed with Macroeconomic Advisers.
Auto Sector Drives Surge in Layoffs
Meanwhile, planned job cuts in U.S. companies totaled 103,522 in May, up from 90,015 in April, employment consulting firm Challenger, Gray & Christmas Inc. reported.
May's total was 46 percent higher than the 71,115 planned layoffs in the same month last year.
Heavy downsizing in the automotive sector, which at 30,011 planned layoffs, contributed to the increase in May.
"The recovery plans that Ford and General Motors set into motion two years ago are being derailed due to skyrocketing gasoline prices,'' said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a press release.
The second hardest-hit sector was the financial firms, with 16,206 job cuts in May. For the year-to-date, the financial sector leads in job cuts, with a total 66,031 cuts announced so far this year.
"There is no end in sight for the crisis in the financial sector. Every time it looks as though banks will turn the corner back toward prosperity, we hear about another major loss, which is often followed by a job cut announcement,'' Challenger said.