US job growth slowed unexpectedly in April, as a sluggish economy and uneven global demand weighed on hiring plans for a second consecutive month.
Private sector employment in the United States increased by just 169,000 in April, payrolls processor ADP reported on Wednesday. That was well below the consensus view, which called for an increase of 200,000.
ADP also lowered its March estimate to 175,000 from 189,000. The rate of job creation has slowed considerably over the past four months, falling below 200,000 in March for the first time in more than a year.
“April job gains came in under 200,000 for the second straight month,” said Carlos Rodriguez, president and chief executive officer of ADP. “Companies with 500 or more employees had the slowest growth.”
Small businesses added 94,000 payrolls in April, while medium-sized companies added 70,000.
Job creation was concentrated solely in the service economy. US service providers added 170,000 jobs last month, following a gain of 172,000 in March. Expansion was strongest in trade/transportation/utilities. Employment in these sectors increased by 44,000. A total of 34,000 new jobs were also created in the professional/business services sectors, ADP data showed.
Goods-producers shed 1,000 cumulative jobs in April, as employment in manufacturing plunged by 10,000. The construction sector added 23,000 jobs last month, up from 21,000 in March.
Mark Zandi, chief economist at Moody’s Analytics, added, ““Fallout from the collapse of oil prices and the surging value of the dollar are weighing on job creation. Employment in the energy sector and manufacturing is declining. However, this should prove temporary and job growth will reaccelerate this summer.”
The US economy is forecast to rebound sharply in the remainder of the year after GDP growth stalled in the first quarter. This will also supported job creation throughout the economy. In March the Federal Reserve forecast unemployment to fall gradually in the next three years, a sign the labour market was returning to full employment.
On Friday the Department of Labor could show the creation of 220,000 nonfarm payrolls in April, according to economists. The unemployment rate is forecast to fall 0.1 percentage point to 5.4%.
Average hourly earnings, which are released alongside the official jobs data, are forecast to rise 0.2% in April.