ADP Job Report April 2023:

Private-sector hiring surged higher than expected in April, countering expectations of an imminent slowdown in the labor market, payroll firm ADP reported on Wednesday.

Personal payrolls rose 296k for the month, above the previous month’s revised down 142k and well above the Dow Jones estimate of 133k. The gain was the highest monthly increase since July 2022.

The surge comes despite efforts by the Federal Reserve to slow economic growth and, in particular, to tame a powerful labor market that added more than 800,000 jobs this year, according to the ADP count. A mismatch between demand and supply in the labor market has led to strong wage increases, reflected in persistent inflationary pressures.

A positive sign for the Fed is that annual wages have risen 6.7% over the past year, a slowdown in earnings, which have been consistently above 7%.

“The slowdown in wage growth gives the clearest signal of what’s going on in the labor market right now,” said Nela Richardson, ADP’s chief economist. “Employers are hiring aggressively while keeping wage increases in check when workers come off the sidelines.”

The company’s report serves as a precursor to the more closely watched census of the Labor Department’s nonfarm payrolls due Friday. Economists polled by Dow Jones expect data to show a 180k rise after 236k in March. The two accounts often differ, sometimes by large margins.

According to the ADP, April saw the fastest job growth in leisure and hospitality, with an increase of 154,000, followed by education and health services (69,000) and construction (53,000). Other sectors that posted solid gains were natural resources and mining at 52,000, and trade, transportation and utilities at 32,000.

The financial sector, hit by deposit runs that have prompted the closure of three mid-sized banks, lost 28,000 jobs this month. Manufacturing also took a hit, posting 38,000 jobs as the sector contracted over the past six months.

Job gains were fairly evenly distributed across firm size, with firms with fewer than 500 employees contributing 243,000 to the total.

Comments are closed.