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ADP Says Companies in U.S. Add Most Workers in Five Months

Companies added more workers in April than at any time in the previous five months, signaling further progress in the labor market, a private payrolls report showed.

The 220,000 increase in employment followed a revised 209,000 gain the prior month that was stronger than initially estimated, according to figures today from the Roseland, New Jersey-based ADP Research Institute. The median forecast of economists surveyed by Bloomberg called for an advance of 210,000 in April.

The additions to headcounts indicate companies are upbeat about the outlook for demand after harsh weather took a toll on spending at the start of the year. Employment growth that boosts paychecks would help drive bigger gains in the consumer purchases that account for almost 70 percent of the economy.

“The job market is gaining strength,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. Moody’s produces the figures with ADP. “The recent pickup in job growth at mid-sized companies may signal better business confidence.”

Estimates of 45 economists in the Bloomberg survey ranged from gains of 165,000 to 250,000 after a previously reported increase of 191,000. A Labor Department report on May 2 is projected to show private payrolls rose by 215,000 last month, according to the Bloomberg survey median.

Stock-index futures reversed gains after the Commerce Department figures showed the economy stalled in the first quarter. The contract on the Standard & Poor’s 500 Index expiring in June fell 0.1 percent to 1,869.6 at 8:39 a.m. in New York.

First Quarter

Gross domestic product grew at a 0.1 percent annualized rate from January through March, compared with a 2.6 percent gain in the prior quarter, according to the Commerce Department. The median forecast of economists surveyed by Bloomberg called for a 1.2 percent increase.

The pullback in growth came as snow blanketed much of the eastern half of the country, keeping shoppers from stores, preventing builders from breaking ground and raising costs for companies. Gains in retail sales, employment and manufacturing at the end of the quarter indicate the setback will be temporary.

ADP’s numbers have been inconsistent in tracking the government’s jobs data so far this year. The group’s initial estimate of March payrolls followed a 192,000 print from the Labor Department. However, in January and February, the ADP figures missed the mark by 23,000 each month.

Goods Producers

Goods-producing industries, which include manufacturers and construction companies, increased headcount by 24,000 in April, according to today’s report. Employment in construction rose by 19,000, while factories added 1,000 jobs.

Payrolls at service providers advanced by 197,000 in April.

Companies employing more than 499 workers added 57,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 81,000 and small companies increased payrolls by 82,000, the report showed.

The ADP report is based on data from businesses with more than 21 million workers on their combined payrolls.

“Businesses are feeling a bit more confident about the economy,” said Millan Mulraine, deputy head of U.S. Research & Strategy at TD Securities USA LLC in New York. “I think what they’re seeing is an economy that’s beginning to pick up some steam and shake off the rut.” A 200,000-plus pace of job growth “could be sustained for the remainder of the year,” he said.

Unemployment Rate

The Labor Department data may show on May 2 that the jobless rate fell to 6.6 percent from 6.7 percent, according to the median estimate in a Bloomberg survey.

Dismissals have waned as the economy showed signs of picking up at the end of the first quarter. The four-week moving average of jobless claims was 316,750 in the period ended April 19 compared with the prior week’s 312,000 that was the lowest since 2007, according to Labor Department data.

Labor market progress has been a focus for Federal Reserve policy makers meeting this week. Economists forecast the central bank will announce it will slow the pace of asset purchases meant to spur growth.

Meanwhile, the Fed has pledged to keep interest rates near zero until the jobless rate falls further and inflation rises toward a 2 percent goal.

“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” Fed Chair Janet Yellen said earlier this month to the Economic Club of New York.

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