U.S. private-sector employers created a paltry 119,000 jobs in April, Automatic Data Processing (Nasdaq:ADP) said on Wednesday. That number was a mere 75 percent of what analysts had expected and further evidence that the nation's economic engine is slowing.
The April numbers marked the slowest expansion of private sector job creation since September 2012.
Analysts polled by Thomson Reuters I/B/E/S had expected ADP's National Employment Report to show that the U.S. economy gained 150,000 private-payroll jobs in April, slightly down from 158,000 in March. And that number, in turn, was sharply lower than February's 237,000.
Further, the estimated gain from February to March was revised down to 131,000, ADP said.
“Job growth appears to be slowing in response to very significant fiscal headwinds," said Mark Zandi, chief economist for Moody's Analytics. "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.”
Goods-producing employment rose by 6,000 jobs in April, its slowest pace of growth in seven months, ADP said. Though it accounted for most of the weakness in goods production job growth in March, construction growth picked up in April and the industry added 15,000 jobs over the month.
Meanwhile, manufacturers shed 10,000 jobs in April -- the first decline in three months and the largest since September 2012.
Service-providing jobs increased by 113,000, the weakest pace of growth in seven months. Among the service industries reported by the ADP National Employment Report, trade/transportation/utilities had the largest gain with 29,000 jobs added over the month. Professional/business services followed, adding 20,000 jobs, and financial activities added
"During the month of April 2013, U.S. private sector employment increased by 119,000 jobs, representing the slowest pace of expansion since September 2012," said Carlos A. Rodriguez, chief executive officer of ADP. "The services sector generated the overwhelming majority of new jobs in April, contributing a total of 113,000, which helped to offset overall softness in
the goods-producing sector, which was marked by a loss of 10,000 manufacturing jobs."
Some analysts found a silver lining in the April report.
"The ADP figures are broadly consistent with our existing forecast that the official non-farm payroll figures, due out on Friday, will show a 125,000 gain for April," said Paul Ashworth, chief U.S. economist with London-based Capital Economics. "Furthermore, the decline in weekly initial jobless claims in the second half of last month to below 350,000 suggests that the weakening in labor market conditions may have passed. The consensus forecast for non-farm payrolls was as high as 148,000 before the ADP release, so presumably some forecasters will be revising their estimates lower, but we're happy to stick with our existing 125,000 call."
Investors and business leaders look to ADP’s report on private-sector payrolls as an early read on the U.S. Department of Labor’s jobs estimate, which will be released Friday and includes information on both private- and public-sector payrolls.