Private sector job growth unexpectedly jumps in April to 296,000
Hiring by US companies unexpectedly surges in April to 10-month high
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Hiring by U.S. companies roared back to life in April, defying expectations for a sharp slowdown in the labor market as a result of higher interest rates, according to the ADP National Employment Report released Wednesday morning.
Companies added 296,000 jobs last month, easily beating the 148,000 gain that economists surveyed by Refinitiv predicted and the revised 142,000 figure recorded last month.
It marked the highest monthly increase since July 2022.
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A "Now Hiring" sign during a job fair at a Schneider Electric manufacturing facility in Hopkins, South Carolina, on Jan. 18, 2023. (Photographer: Micah Green/Bloomberg via Getty Images / Getty Images)
The report comes as the Federal Reserve wages the most aggressive fight since the 1980s to crush inflation and slow the labor market with a series of rapid interest rate increases. Fed policymakers have made it clear that they anticipate unemployment to climb as a result of higher borrowing costs, which could force consumers and businesses to pull back on spending.
In a potentially welcoming sign for the Fed as it tries to wrangle inflation under control, wages cooled at a faster pace in April for both workers who stayed in their jobs and who left. Annual pay rose 6.7% in April, down from 6.9% in March, according to the report.
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"The slowdown in pay growth gives the clearest signal of what's going on in the labor market right now," said Nela Richardson, chief economist at ADP. "Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs."
Job seekers visit booths during the Spring Job Fair at the Las Vegas Convention Center Friday, April 15, 2022. ((K.M. Cannon/Las Vegas Review-Journal) / Getty Images)
The bulk of the gains in April stemmed from the leisure and hospitality industry, which added 154,000 new workers.
Other industries that saw payroll growth last month included education and health services (69,000), construction (53,000), natural resources and mining (52,000), and trade, transportation and utilities (32,000).
The biggest losses, meanwhile, were concentrated in the manufacturing sector, which saw payrolls tumble by 38,000. Financial activities also shed 28,000 positions, while professional and business services cut 16,000.
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By size, medium and small businesses led the way in hiring last month, onboarding 122,000 and 121,000 workers, respectively. That is a reversal from prior months, in which small businesses struggled to find and retain workers. Large businesses hired just 47,000 workers in April.
The data precedes the release of the more closely watched April jobs report on Friday morning, which is expected to show that employers hired 179,000 workers following a gain of 236,000 in March. The unemployment rate is expected to inch higher to 3.6%.