ADP Private Payrolls Rise in May, as Verizon Strike Doesn't Affect Tally -- Update
June 02 2016 - 8:45AM
Dow Jones News
By Lisa Beilfuss
Private-sector hiring rose in May, the latest sign that the U.S.
job market remains solid.
Private payrolls across the U.S. rose by 173,000 last month,
said payroll processor Automatic Data Processing Inc. and
forecasting firm Moody's Analytics. Economists surveyed by The Wall
Street Journal expected an increase of 170,000.
The April increase, meanwhile, was revised up to 166,000 from an
initially-reported 156,000.
Many economists expect that the seven-week strike at Verizon
Communications Inc. hurt May payrolls. Though the strike is likely
to pull down nonfarm payrolls released by the government tomorrow,
it didn't affect ADP's tally.
While job creation has moderated in recent months, as energy
companies and manufacturers shed jobs and as the market tightens
for skilled labor, "job growth remains strong enough to reduce
underemployment," said Mark Zandi, chief economist of Moody's
Analytics.
Service-sector firms continued to propel job growth in May,
upping hiring slightly from April and offsetting another decline in
factory head counts. While manufacturing conditions have improved
in recent months, many firms have been waiting for signs the
recovery would stick before adding works and some have had trouble
locating the right workers.
Small firms continued to hire at a better clip than bigger
businesses more affected to the global economic slowdown and
currency headwinds. America's smallest companies added 76,000
workers last month, down from April but still outpacing hiring by
medium and large businesses.
May's private payrolls report reflects "a solid though not
spectacular amount of jobs in May," said Chris Rupkey, chief
financial economist at MUFG Union Bank. Mr. Rupkey notes low layoff
levels as further evidence of a tight labor market, and other data
including initial claims for jobless benefits continue to
illustrate a solid labor market.
The ADP report precedes the Bureau of Labor Statistics' May
employment-situation report, due out Friday morning and the last
one before the Federal Reserve's June 15 rate decision. ADP lags
behind the government's initial private payroll estimate by a
month, and it doesn't aim to replicate the nonfarm payrolls
survey.
In its report released yesterday on regional economic
conditions, known as the beige book, the Fed said "tight labor
markets were widely noted in most districts." Fed Chairwoman Janet
Yellen has said a rate increase would be appropriate "probably in
the coming months" if the economy and labor market continue to
strengthen.
Economists polled by The Wall Street Journal expect the BLS to
report an increase of 158,000 nonfarm payrolls, little changed from
April and reflecting the Verizon strike. The unemployment rate is
expected to hold steady at 5%.
The strike didn't show up in ADP's report because Verizon
doesn't use ADP as a payroll processor, and ADP said it didn't
adjust its report to account for the strike.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
June 02, 2016 09:30 ET (13:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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