ADP Says Companies in U.S. Add 201,000 Workers to Payrolls

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Companies added more workers in May than the prior month, a sign U.S. job growth is getting back on track after a slow start to the year, a private payrolls report showed.

The 201,000 increase in employment followed a revised 165,000 gain the prior month, according to figures Wednesday from the Roseland, New Jersey-based ADP Research Institute. The median forecast of 46 economists surveyed by Bloomberg called for an advance of 200,000.

Firings are lingering near a 15-year low, encouraging employers to keep adding to staff to meet improving sales as the economy begins to crawl out of a first-quarter slump. A string of faster payroll increases that absorbs enough labor-market slack may prompt companies to offer higher wages.

“As businesses continue to grow, they need to hire additional labor to fill those new orders for goods and services that are continuing to come in the door,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “We’re still seeing job growth at a monthly rate that’s well capable of soaking up excess capacity in the labor markets.”

Estimates in the Bloomberg survey ranged from gains of 153,000 to 275,000. The prior month’s figure was revised from a previously reported increase of 169,000. A Labor Department report this week may show private payrolls rose by 220,000 last month, according to the Bloomberg survey median.

Construction Hiring

Goods-producing industries, which include manufacturers and construction companies, increased headcount by 9,000 in May, according to Wednesday’s report. Employment in construction rose by 27,000, while factories cut 5,000 jobs. Payrolls at service providers advanced by 192,000.

Companies employing more than 500 or more workers added 13,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 65,000 and the smallest companies increased payrolls by 122,000, the report showed.

“At the current pace of job growth, the economy will be back to full employment by this time next year,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. Moody’s produces the figures with ADP. “The only blemishes are the decline in mining jobs due to the collapse in oil prices and the decline in manufacturing due to the strong dollar.”

The ADP report is based on data from businesses with almost 24 million workers on their combined payrolls.

Jobs Report

The June 5 Labor Department report is projected to show a 227,000 increase in May employment, including government agencies, according to the Bloomberg survey median. The unemployment rate is forecast to hold at 5.4 percent, the lowest since May 2008.

Figures on jobless claims indicate workers have more job security. Fewer than 300,000 Americans filed for unemployment benefits in the week ended May 23, the 12th straight week of readings below that level that typically coincides with healthy rates of hiring.

At the same time, wages have been slower to accelerate this expansion. Average hourly earnings rose in April at a 2.2 percent year-over-year pace, barely above the 2 percent average since the recession ended in June 2009.

Job-market progress is helping buoy household sentiment, allowing the world’s largest economy to remain “well-positioned for continued growth,” Federal Reserve Chair Janet Yellen said in a May 22 speech in Providence, Rhode Island.

If economic data match the Fed’s projections, the central bank probably will raise the benchmark interest rate this year, she said. It would mark the Fed’s first increase since 2006.

“It is only now, six years after the recession ended, that the labor market is approaching its full strength,” Yellen said. “Households are seeing the benefits of the improving jobs situation, and consumer confidence has been solid.”

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