Companies Add Fewer Workers Than Forecast, ADP Data Show

Companies in the U.S. added fewer jobs than forecast in May, a sign of uneven progress in the labor market, a private report based on payrolls showed.

The 179,000 increase in employment was the smallest in four months and followed a 215,000 gain the prior month that was less 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 May advance of 210,000.

Some companies are confident they can meet demand without adding as many workers to headcounts after the economy shrank last quarter for the first time since 2011. Faster job growth that propels bigger wage gains would give consumers the wherewithal to boost spending, which makes up about 70 percent of the economy.

“It does fit in with the story that the economy is not rebounding quite as strongly as expected in the second quarter,” said David Sloan, senior economist at 4Cast Inc. in New York. “It was a modest disappointment. It’s still consistent with a respectable pace of growth.”

Estimates in the Bloomberg survey ranged from payroll gains of 120,000 to 275,000 after a previously reported April increase of 220,000.

Goods-producing industries, which include manufacturers and construction companies, increased headcount by 29,000 in May, according to today’s report. Construction employment climbed by 14,000 and factory payrolls rose by 10,000, today’s report showed. Payrolls at service providers advanced by 150,000.

Company Size

Companies employing 500 or more workers added 37,000 jobs. Employment at businesses with 50 to 499 employees increased 61,000 and the smallest companies boosted payrolls by 82,000, the report showed.

“The job market has yet to break out from the pace of growth that has prevailed over the last three years,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. Moody’s produces the figures with ADP.

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

The Labor Department data may show on June 6 that private payrolls, which exclude government agencies, increased 210,000 in May after a 273,000 gain in the month prior, according to the median estimate in a Bloomberg survey.

Federal Reserve policy makers have been monitoring progress in the labor market as they dial back their bond-buying program aimed at boosting economic growth.

The economy has further to go to achieve full health, Fed Chair Janet Yellen said in a speech earlier this month. In her first 100 days, Yellen has emphasized the central bank’s full-employment goal and stressed the need for progress on the broadest measures of joblessness, including the number of people out of work long-term and those who can find only part-time solutions.

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