Private Sector Adds Just 119,000 Jobs in April: ADP
Private-sector employment increased by just 119,000 in April, according a report from ADP that puts a dent into the notion that the jobs market is on the path to a solid recovery.
The report was well below forecasts of 170,000 and comes after a string of stronger numbers.
ADP said service-sector jobs rose by 123,000, but construction fell by 5,000, falling for the first time since September 2011. Manufacturing also lost 5,000, while goods-producing dropped 4,000. Financial services added 13,000 jobs.
The March number was revised downward from 209,000 to 201,000, according to the report, which is done in conjunction with Macroeconomic Advisors.
Joel Prakken, chairman of Macroeconomic Advisors, called the numbers "a little on the soft side" during an interview on CNBC's "Squawk Box." However, he said he is not changing his forecast for employment or economic growth.
Prakken cautioned that employment is a lagging indicator, meaning it reflects past economic activity, not the prospects going forward. He also attributed some of the letdown to accelerated job growth that occurred earlier in the year because of warmer weather patterns.
"A lot of the data that we looked at that's more forward-looking in nature, really holding up pretty well," he said.
Stock market futures added to losses on the report while bond yields slipped.
Economists sometimes will adjust their forecasts for the critical monthly nonfarms payroll report after seeing the ADP numbers. The private payrolls report, though, for months had been well off the target of the government's number, which also includes public-sector cuts. Governments had been cutting jobs substantially, but that has slowed in recent months.
The ADP, then, could be a signal that the payrolls report and the accompanying unemployment rate , due this Friday, could be worse than the expected 168,000. March's Bureau of Labor Statistics number also was soft, coming in at just 120,000. The report comes as weekly jobless claims have been on a steady trek higher as well.
At the same time, Federal Reserve Chairman Ben Bernanke and his fellow policymakers at the central bank have expressed worry that the employment picture ahead is likely to be weak.
"Today’s miss on the ADP number confirms a broader slowdown in activity more in-line with what the ISM regional data showed earlier in the week and corroborating Bernanke’s hypothesis that the fourth-quarter labor market improvement represented a snapback and that the journey out of the financial crisis is likely to remain arduous," said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York.
"That in turn requires the Fed to keep its shoulder to the wheel and maintain downwards pressure on yields and the balance sheet wider than the Grand Canyon," he added.
Carlos Rodriguez, president of ADP, said the April numbers are consistent with the first-quarter gross domestic product growth of 2.2 percent, which also was well below economists' projections and primarily reflected a cutback in government spending.
"We hope future rates of job creation will be more aggressive and sustained," Rodriguez said in a statement.
Employment additions again were strongest in small businesses, which added 58,000 positions, and weakest in big business, which saw a net of just 4,000 new jobs.