US private payrolls climb by 742,000 in April as labor market strengthens, ADP says

New York shopping reopening
People walk through downtown Brooklyn on May 3, 2021 in New York City. Spencer Platt/Getty Images
  • The US gained 742,000 private payrolls in April, ADP said in its monthly employment report.
  • The reading marks a fourth straight monthly climb but is below economists’ 873,000-payroll estimate.
  • The report backs up forecasts of strong hiring from reopening and vaccination in the last month.
  • See more stories on Insider’s business page.

The US private sector saw hiring accelerate through April as widespread vaccination led the economy to further reopen.

Private payrolls grew by 742,000 last month, according to ADP’s monthly employment report. The median estimate from economists surveyed by Bloomberg was for a gain of 873,000 payrolls. The most optimistic estimates pegged job growth at well over 1 million.

The March increase was revised higher to 565,000 gained payrolls, from 517,000.

The Wednesday reading marks a fourth straight month of job growth and places private-sector payrolls at their highest since March 2020, when the pandemic first rocked the US economy. The month-over-month jump is also the largest since September, signaling the recovery is speeding up as the country relaxes lockdown measures.

“The labor market continues an upward trend of acceleration and growth, posting the strongest reading since September 2020,” Nela Richardson, chief economist at ADP, said in a statement. “Service providers have the most to gain as the economy reopens, recovers, and resumes normal activities and are leading job growth in April.”

The leisure and hospitality and trade, transportation, and utilities sectors added the most payrolls through the month, according to ADP. The information industry was the only one to lose jobs with a decline of 3,000.

Businesses with 49 employees or fewer added 235,000 payrolls in April. Medium-sized firms – those with 50 to 499 employees – counted for 230,000 of the new jobs, and large businesses added 277,000 payrolls.

From ‘inflection point’ to steady improvement

The ADP report serves as a precursor to the Bureau of Labor Statistics’ own monthly hiring data. The report, set to be published Friday, is expected to show the country adding 995,000 payrolls in April. Economists also forecast the unemployment rate falling to 5.8% from 6%.

The pace of the labor market’s recovery picked up significantly in the spring after soaring COVID-19 cases saw hiring stagnate – and even contract – through winter. Distribution of coronavirus vaccines since allowed the country to gradually reopen, and stimulus passed by President Joe Biden in March fueled stronger consumer spending. The resulting surge in economic activity saw businesses speed up their hiring efforts in March.

Now, with more Americans getting vaccinated and daily virus case counts declining again, expects expect the next few months to yield stellar job growth. Fed Chair Jerome Powell characterized the March bounce as an “inflection point” for the recovery. Separately, economists at Bank of America and UBS expect monthly payroll growth to trend near 1 million into the summer.

That’s not to say the recovery has been without its snags. Various sectors within the service and manufacturing industries have reported difficulties in finding workers. The hurdles have raised concerns that the labor market might fail to stage a full recovery, but ADP views the pressures as having more to do with unappealing pay than a lack of worker supply.

“You might see some wage pressure build up, but with 8 million sidelined there really are workers for these jobs,” Richardson said in a press call, adding the shortages are in “isolated segments” of the economy.

In other data tracking the broad recovery, US gross domestic product rose at an annualized rate of 6.4% in the first quarter. The expansion serves as the second-strongest since 2003, dwarfed only by the record-breaking surge seen during the third quarter of 2020.

The leap places the economy within spitting distance of fully retracing its pandemic-era decline in GDP. With hiring expected to improve further in the coming months and vaccination allowing more businesses to reopen, it’s highly likely the US exceeds its previous GDP peak in the second quarter.