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ADP Says U.S. Companies Employed Fewer Workers Than Forecast

A job seeker shakes hands with a recruiter at the Spring LGBT Career Fair in San Francisco, California. Photographer: David Paul Morris/Bloomberg
A job seeker shakes hands with a recruiter at the Spring LGBT Career Fair in San Francisco, California. Photographer: David Paul Morris/Bloomberg

Companies added fewer workers than forecast in April, an indication the labor market has cooled along with the rest of the U.S. economy.

The 119,000 increase in employment, the smallest since September, followed a revised 131,000 gain in March that was smaller than initially estimated, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 37 economists surveyed by Bloomberg projected a 150,000 advance.

By hiring fewer employees, companies are signaling they expect demand will deteriorate as reductions in the federal budget and higher taxes weigh on the U.S. economic expansion. At the same time, a Labor Department report later this week is projected to show private payrolls rose by 160,000 last month, according to the Bloomberg survey median.

“Job growth appears to be slowing in response to very significant fiscal headwinds,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. Moody’s produces the figures with ADP. “Tax increases and government spending cuts are beginning to hit the job market. Job growth has slowed across all industries and most significantly among companies that employ between 20 and 499 workers.”

Stock-index futures pared gains after the report, with the contract on the Standard & Poor’s 500 Index expiring in June rising less than 0.1 percent to 1,592.6 at 8:18 a.m. in New York after climbing as much as 0.2 percent.

Survey Results

Estimates in the Bloomberg survey ranged from gains of 110,000 to 190,000. ADP revised the prior month’s figure from a previously reported increase of 158,000.

Goods-producing industries, which include manufacturers and construction companies, expanded their headcounts by 6,000 in April. Factory employment dropped by 10,000, while construction employment climbed by 15,000.

Payrolls at service providers, including professional and business industries, grew by 113,000 workers in April, according to today’s report.

Companies employing more than 499 workers took on 43,000 workers. Medium-sized businesses, with 50 to 499 employees, hired 26,000, and small companies hired 50,000.

ADP in October changed the method it had used to calculate its employment figures dating back to 2001. The report is now derived from a larger sample using a new methodology and is released jointly with Moody’s of West Chester, Pennsylvania.

The Labor Department may report on May 3 that total payrolls, which include government jobs, grew by 148,000 last month after an 88,000 gain in March, according to the Bloomberg survey median. The jobless rate probably held at 7.6 percent, the economists predicted.

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