U.S. companies added in April the fewest jobs in the pandemic recovery, underscoring the persistent challenges faced by small firms to increase headcount in a tight labor market.
Businesses’ payrolls increased by 247,000 last month, after a revised 479,000 gain in March, according to ADP Research Institute data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 383,000 advance.
Businesses with 500 or more employees posted solid hiring gains, but those with less than 50 lost 120,000 jobs in April, the worst in two years.
“While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers,” Nela Richardson, chief economist at ADP, said in a statement. “As the labor market tightens, small companies, with fewer than 50 employees, struggle with competition for wages amid increased costs.”
The weaker-than-expected advance suggests firms are making little progress filling a record number of job openings despite recent wage increases. Many businesses still desperately want to hire more workers, but a depressed participation rate continues to limit further employment growth.
The figures precede the government’s monthly jobs report on Friday, which is currently forecast to show private payrolls increased by 390,000 in April. The ADP figures don’t always follow the same pattern as the Labor Department’s data.
Even though the report missed estimates, other data suggest the labor market remains overheated as Federal Reserve Chair Jerome Powell has described in recent weeks. The central bank is expected to hike interest rates by 50 basis points Wednesday in a stepped-up effort to tame decades-high inflation.
Service-provider employment rose by 202,000, led by leisure and hospitality and professional and business services. Employment at goods producers was up 46,000, reflecting advances in manufacturing and construction.
ADP’s payroll data represent firms employing nearly 26 million workers in the U.S.
