[WASHINGTON] Companies added the fewest number of US workers in seven months in April, a reminder that the job market will take time to strengthen, a private report based on payrolls showed yesterday.
Employment increased by 119,000 following a revised 201,000 gain the prior month, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for a 170,000 advance.
Companies may remain hesitant about expanding their workforce until they see more evidence that the gains in consumer spending, which account for about 70 per cent of the economy, will be sustained.
A Labor Department report tomorrow is projected to show that private payrolls accelerated in April, while unemployment held at 8.2 per cent.
"Employment growth is slowing," said David Sloan, an economist at 4Cast Inc in New York. "The economy is growing at a fairly slow pace, though it's sustainable."
Stocks fell on the smaller-than-projected gain in the payroll estimate. The Standard & Poor's 500 Index declined 0.8 per cent to 1,395.12 at 10.20am New York time. The Dow retreated 0.6 per cent, to 13,202.92.
Over the previous six reports, ADP's initial figure was closest to the Labor Department's first estimate of private payrolls in October, when it overstated the gain in jobs by 6,000. The estimate was least accurate in December, when it overestimated the employment gain by 113,000.
Goods producing industries, which include manufacturers and construction companies, decreased workers by 4,000 last month, yesterday's figures showed. Employment at factories declined by 5,000 as did payrolls in construction.
Growth in US manufacturing has been tame, with a report showing yesterday that orders to US factories decreased in March, restrained by a pullback in demand for aircraft that overshadowed gains elsewhere.
Bookings fell 1.5 per cent after a revised 1.1 per cent gain in February, figures from the Commerce Department showed yesterday.
The report comes a day after purchasing managers said that manufacturing expanded in April at the fastest pace in almost a year as orders, production and employment picked up, indicating the slump may be short-lived.
"The manufacturing sector appears to be showing some impressive resilience in the face of slowing global demand," David Greenlaw, chief US fixed-income economist at Morgan Stanley in New York, said in a note to clients. Nonetheless, he said, "the forward momentum in manufacturing is more subdued" than at this time last year.
Service providers added 123,000 workers, according to the ADP report.
Companies employing more than 499 workers added 4,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 57,000 and small companies increased payrolls by 58,000, ADP said.
The economy expanded at a 2.2 per cent annual rate in the first quarter after a 3 per cent pace in the final three months of last year, Commerce Department figures showed last week.
Growing demand is generating employment. Volkswagen AG's US financing arm said that it will expand its Illinois office, adding about 150 new jobs through 2018. VW Credit Inc on April 20 broke ground on a 30,000-square-foot expansion to about double the size of its facility in Libertyville, Illinois. - Bloomberg