Private businesses barely added jobs in May as large companies cut workers, according to a report released Wednesday. The news is sure to raise further fears about the second-quarter U.S. economy.
Private-sector jobs in the U.S. rose by just 38,000 last month, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.
Economists surveyed by Dow Jones Newswires had expected ADP to report a much larger job gain of 190,000 last month. The April data were revised to show a rise of 177,000 versus 179,000 first reported.
The ADP report said the deceleration, while disappointing, was not entirely surprising given weak growth in the U.S. economy so far this year. Real gross domestic product grew only 1.8% in the first quarter.
The weaker-than-expected ADP number follows a string of data that indicate the U.S. economy struggled in May. Regional factory reports were weak, jobless claims remained high, and the Conference Board’s consumer confidence index fell sharply in May.
The ADP survey tallies only private-sector jobs, while the Bureau of Labor Statistics’ nonfarm payroll data, to be released Friday, include government workers. In recent months, state and local governments have been laying off workers to close budget gaps.
As a result, economists surveyed by Dow Jones Newswires expect total nonfarm payrolls increased by 183,000 in May, down from the 244,000 gain reported in April. It remains to be seen if the ADP data prompt forecasters to change their estimates for Friday.