ADP Says Companies Add Fewest U.S. Workers in Seven Months

Companies added the fewest number of U.S. workers in seven months in April, indicating the job market may take time to strengthen, a private report based on payrolls showed today.

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 accounts for about 70 percent of the economy, will be sustained. A Labor Department report in two days is projected to show that private payrolls accelerated in April, while unemployment held at 8.2 percent.

“Employment growth is slowing,” said David Sloan, an economist at 4Cast Inc. in New York, who projected a 125,000 gain in the ADP figure. “The economy is growing at a fairly slow pace, though it’s sustainable.”

The projections ranged from 100,000 to 200,000, based on the estimates of 37 economists surveyed by Bloomberg.

Stock-index futures extended declined after the figures, with the Standard & Poor’s 500 Index dropping 0.5 percent to 1,394 at 8:45 a.m. in New York.

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.
Fewer Factory Jobs

Goods-producing industries, which include manufacturers and construction companies, decreased workers by 4,000 in April, today’s figures showed. Employment at factories declined by 5,000 in April as did payrolls in construction.

Service providers added 123,000 workers.

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 percent annual rate in the first quarter after a 3 percent pace in the final three months of 2011, Commerce Department figures showed last week. Growth was led by the biggest gain in consumer spending in more than a year.

Growing demand is generating employment. Volkswagen AG’s U.S. financing arm said it will expand its Illinois office, adding about 150 new jobs through 2018, as the German automaker grows its American business. 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.
Employment Report

The Labor Department’s report, to be released on May 4, may show overall hiring, which includes government jobs, may have climbed about 160,000 after rising 120,000 in March, according to the Bloomberg survey median. The jobless rate probably held at 8.2 percent, economists in the survey predicted. Unemployment has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.

“Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated,” Fed policy makers said in an April 25 statement. The group “expects economic growth to remain moderate over coming quarters and then to pick up gradually,” and “anticipates that the unemployment rate will decline gradually.”

The ADP report is based on data representing businesses with more than 21 million workers on payrolls. Macroeconomic Advisers LLC in St. Louis produces the data with ADP.