The U.S. economy added far few private sector jobs than expected last month, payroll processing group ADP said Wednesday, setting up a modestly weaker reading for the official April employment report later this week as Americans continue to leave the workforce at a record pace.
ADP said in its National Employment Report, which it complies with Moody's Analytics, that private sector jobs grew by 247,000 last month, well shy of Street forecasts of a 395,000 total, and the smallest monthly gain in two years. The final reading for March was also revised lower, by 24,000 positions, to 455,000.
The bulk of the April gains came from large-sized businesses, ADP said, while the services sector provided the biggest boost with 202,000 new hires.
The data follows figures from the Labor Department yesterday showing a record 4.5 million Americans quit their jobs in March, leaving a much higher-than-expected 11.5 million positions left unfilled.
"In April, the labor market recovery showed signs of slowing as the economy approaches full employment," said ADP's chief economist Nela Richardson. "While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers. As the labor market tightens, small companies, with fewer than 50 employees, struggle with competition for wages amid increased costs."
Stock market futures were broadly unchanged following the data release, but still suggest modestly opening bell gains ahead of the Federal Reserve's much-anticipated interest rate decision at 2:00 pm Eastern time and Jerome Powell's media briefing which begins 30 minutes later
Contracts tied to the Dow Jones Industrial Average suggest a 120 point opening bell gain, while those linked to the broader S&P 500 are priced for a 15 point advance. Nasdaq Composite futures, meanwhile, are looking at a 40 point bump.
The Bureau of Labor Statistics will publish its official employment report Friday, with economists looking for a net jobs gain of around 394,000, a slight but not hugely significant slowdown from the 431,000 gain recorded in March.
Average hourly earnings gains are expected to hold at 0.4% while the headline unemployment rate is forecast to tick lower, to a multi-decade trough of around 3.5%.
