Is a Hiring Slowdown Underway?

ADP graphic April 2016Has the global economic slowdown reached American shores? Analysts are pondering that question in the wake of this morning’s ADP National Employment Report that put private sector job growth in April at 156,000, the smallest monthly increase in three years.

Labor economists surveyed prior to the report anticipated an increase around 200,000, which is the average of the last three ADP reports. The far lower number came as a surprise.

“The job market appears to have stumbled in April,” said Mark Zandi, chief economist of Moody’s Analytics, which partners with ADP in preparing the report. “Job growth noticeably slowed, with some weakness across most sectors. One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring.”

Last week, the Commerce Department reported the U.S. economy grew at a seasonally adjusted annual rate of 0.5% in the first quarter, the slowest rate in two years and well below the 1.4% of the last quarter of 2015. Behind the decline, according to the Bureau of Economic Analysis, were declines in spending on durable goods, and inventory investment declines in manufacturing and wholesale trade.

ADP April 2016 by sectorToday’s ADP report said the overall goods producing sector cut 11,000 jobs in April, with the manufacturing sector reducing payolls by 13,000 workers. It was the third consecutive month of manufacturing jobs loss.

Other sectors showed gains, though in nearly all cases they were smaller than in the previous three months.

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Additionally, while the smallest employers (fewer than 50 workers) continued to hire strongly adding 93,000 jobs, larger employers hired fewer workers than at any time in the last six months. Mid-sized employers (50-499 workers) cut their job growth to 39,000 from the 66,000 they hired in March. The largest employers (more than 1,000 employees) hired a mere 9,000 new workers, the smallest increase since June of last year.

Whether this indeed signals a slowdown is murky. The Wall Street Journal said economists suggested an early Easter, a walkout by 40,000 Verizon workers and statistical quirks could have had a disproportionate impact on the ADP analysis.

While the ADP report suggests a weaker jobs report Friday, when the Labor Department issues the government’s employment numbers, David Ader of CRT Capital Group observed that ADP typically comes in an average of 28,000 private non-farm jobs below the government.

Economists surveyed by The Journal expect the Labor Department to report 205,000 new jobs were created in April. Other surveys say the unemployment rate, currently at 5.0% will be unchanged.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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