Private U.S. companies added just 179,000 jobs in May, reported ADP. This missed expectations for 210,000.
Adding to the disappointment, ADP revised its April number down to 215,000 from an earlier estimate of 220,000.
“Job growth moderated in May,” said Moody’s Analytics’ Mark Zandi. “The slowing in growth was concentrated in Professional/Business Services and companies with 50- 999 employees. The job market has yet to break out from the pace of growth that has prevailed over the last three years.”
Some economists consider the ADP report to be a reliable preview of the Bureau of Labour Statistics’ official monthly nonfarm payrolls (NFP) report. But most are guarded.
“While a bit below expectations, we would emphasise that the methodology and frequent revisions of the ADP employment report limit its usefulness for forecasting the BLS private employment series on a month-to-month basis,” said Barclays Cooper Howes. “We continue to look for a rise of 225k in May nonfarm payrolls, a 225k rise in private payrolls, and an unchanged unemployment rate of 6.3% in the BLS employment report released on Friday.”
Pantheon Macroeconomics’ Ian Shepherdson recommends ignoring the report altogether.
“[W]e can see no sustained relationship between this metric and the subsequent payroll numbers, though we accept that the sample is small and the past few months’ official numbers have been hit by the weather,” wrote Shepherdson. “Note too that the soft ADP is hard to square with the drop in claims. Still, we now await tomorrow’s NFIB jobs report with great interest; for now, we stick to our 230K NFP estimate.”
Here’s a look at the change in employment by industry:
Here’s a look at the change in employment by company size:
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