Private-sector employers added 156,000 jobs in April

Private-sector employers added 156,000 jobs in April
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U.S. businesses added jobs in April at the slowest pace in three years, raising concerns that turbulent financial markets and slower economic growth in the first few months of the year are hampering hiring.

Private-sector employers increased hiring by 156,000 jobs last month, slower than the 194,000 in March, according to the ADP National Employment Report released on Wednesday.

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Mark Zandi, chief economist of Moody’s Analytics, said despite the soft numbers last month he doesn’t see any fundamental change in the labor market's expansion and still expects the economy to reach full employment sometime this summer.

“The job market appears to have stumbled in April," said Zandi, whose firm compiles the ADP data.

"One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring," he said. 

The labor market expansion has outpaced economic growth, which was an anemic 0.5 percent in the January-March quarter, the worst showing in the past two years.

Still, estimates for the government's jobs report set for release on Friday remain solid around 205,000, a slightly slower pace than March's 215,000.

The unemployment rate is expected to hold at 5 percent.

Zandi said despite the blip in the data, jobs growth is strong and the economy only needs to add about 90,000 jobs a month to absorb workers flowing back into the labor market as the economy marches toward full employment. 

He pointed to the consistently low level of unemployment claims, which have remained at healthy levels under 300,000 for more than a year. 

In fact, Zandi said that in two years businesses will probably be struggling to find qualified workers, a huge shift after a decade of persistent unemployment and underemployment. 

In April, employment at medium and larger firms slipped while smaller-sized businesses maintained a steady pace of hiring.

"Despite the softest overall monthly jobs added in three years, small businesses remained an engine for job growth in April,” said Ahu Yildirmaz, head of the ADP Research Institute.

“Smaller businesses are less susceptible to global conditions, such as low commodity prices and the strong dollar, that may have caused larger businesses to ease up on hiring," Yildirmaz said.

Businesses with 49 or fewer employees added 93,000 jobs in April, about the same as March.

But companies with 50-499 employees only added 39,000 jobs, well below last month’s 66,000.

Employment at large companies — those with 500 or more employees — dropped off to 24,000 from March’s 35,000.

Even service-sector employment, which represents about 90 percent of the economy, saw a drop of 23,000 last month.

A separate report by the Institute for Supply Management released on Wednesday was more upbeat for April, showing improved hiring with many businesses expecting that the April-June period would produce better results.

The ADP report said the construction industry added 14,000 jobs, which was down from March’s 18,000.

As construction projects increase there are some concerns about the ability to find qualified workers. 

“Severe non-skilled labor shortage is hurting the construction industry," one respondent said in the ISM report. 

Meanwhile, manufacturing lost 13,000 jobs after being revised down to a loss of 3,000 jobs in March.