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Economy: Smallest job gain since start of recovery; private-sector growth moderating, ADP reports

June 05, 2019

Private-sector job growth in the US is moderating, posting its smallest gain since the economic expansion began, according to the ADP National Employment Report released today. Separately, The Conference Board Help Wanted OnLine Index fell in May. However, the Institute for Supply Management reported activity picked up in the nonmanufacturing sector.

The ADP National Employment Report found the US added 27,000 private-sector jobs in May from April, with most of the gains at large businesses and in the service sector.

“Following an overly strong April, May marked the smallest gain since the expansion began,” said Ahu Yildirmaz, VP and co-head of the ADP Research Institute. “Large companies continue to remain strong as they are better equipped to compete for labor in a tight labor market.”

Large companies added 68,000 jobs in May while midsize firms added 11,000 jobs. On the other hand, small businesses decreased employment by 52,000 jobs.

By sector, the service sector added 71,000 jobs in May, but the goods-producing sector lost 43,000. Much of the decline in the goods-producing sector was in construction, which lost 36,000 jobs in May.

“Job growth is moderating,” said Mark Zandi, chief economist of Moody’s Analytics, which produces the report in collaboration with ADP (NASDAQ: ADP). “Labor shortages are impeding job growth, particularly at small companies, and layoffs at brick-and-mortar retailers are hurting.”

The Conference Board announced today its Help Wanted OnLine Index fell to a reading of 101.5 in May (July 2018 = 100) from a reading of 103.9 in April.

It noted the index reading for “computer and mathematical science” jobs fell 3.6% while the reading for “business and financial operations” jobs fell 3.3%.

The Institute for Supply Management reported today its nonmanufacturing Purchasing Managers Index rose to a level of 56.9 in May from 55.5 in April. The index is based on a survey of purchasing and supply executives.

Readings above 50 indicate expansion, but the institute cautioned that activity is leveling off.

“The nonmanufacturing sector continues to experience a slight uptick in business activity, but it is still leveling off overall,” said Anthony Nieves, chair of the institute’s Nonmanufacturing Business Survey Committee. “Respondents are mostly optimistic about overall business conditions, but concerns remain about tariffs and employment resources.”

Meanwhile, the employment portion of the index jumped to a reading of 58.1 in May from 53.7 in April.

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