Private payrolls grow by 204K in April vs. 200K est.: ADP/Moody's Analytics

Key Points
  • Companies added 204,000 jobs in April, according to ADP and Moody's Analytics. That's just above expectations for 200,000.
  • Service-related industries created 160,000 jobs while goods producers added 44,000, including 27,000 in construction.
  • The number serves as a precursor for Friday's nonfarm payrolls report, which is expected to show growth of about 195,000.
Private payrolls grow by 204K in April
Private payrolls grow by 204K in April

Hiring continued at a solid pace in April, with private companies adding 204,000 positions even amid signs of a tightening jobs market, according to a report Wednesday from ADP and Moody's Analytics.

The number was essentially in line with expectations of economists surveyed by Reuters who had forecast 200,000. The total did indicate a slight deceleration from March, which posted a downward revised 228,000 from an initially reported 241,000.

Job growth was broad-based, with gains coming not only from a number of service-based sectors but also goods-producing areas including construction, which added 27,000 positions.

April also represented the ADP/Moody report's sixth-straight month of private payroll growth above 200,000.

"Despite rising trade tensions, more volatile financial markets, and poor weather, businesses are adding a robust more than 200,000 jobs per month," Moody's chief economist Mark Zandi said in a statement. "At this pace, unemployment will soon be in the threes, which is rarefied and risky territory, as the economy threatens to overheat."

The national jobless rate currently sits at 4.1 percent and near what economists consider full employment. However, payrolls continue to increase a strong pace.

A jobless rate in below 4 percent would represent "awfully risky" territory, Zandi told CNBC's "Squawk Box." Economists worry that more downward pressure on the jobless rate will result in rapid wage growth that will lead to inflation.

"It's going to be tough to navigate and land the plane when you're in the 3s," Zandi said, though he added that the continued pace of job gains above 200,000 a month is "fantastic growth."

Economists sometimes use the ADP number as a guide for their estimate of the government's official nonfarm payrolls count, due Friday. Expectations currently are for an increase in that report of about 195,000. The two counts can differ sharply, however, as ADP's March estimate was well above the Bureau of Labor Statistics' 103,000 tally.

According to ADP/Moody's, services-related industries created 160,000 jobs while goods producers added 44,000.

"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. "However, as the labor pool tightens it will become increasingly difficult for employers to find skilled talent."

Leading sectors included professional and business services (58,000), education and health (39,000) and leisure and hospitality (36,000). Manufacturing contributed 10,000 while natural resources and mining added another 7,000.

From a business size standpoint, the contribution was evenly distributed, with companies employing 50 to 499 workers adding 88,000, small firms hiring 62,000 and large companies growing by 54,000.

Franchises posted the only decline for the month, losing 10,600 positions.