US private sector employers added twice as many jobs as expected in April, data released on Wednesday suggested.
At 296,000, the ADP print easily topped the highest estimate from 29 economists, suggesting not only that the labor market is holding up, but that it may be picking up, and rather quickly at that.
Hiring was broad-based by firm size, and although manufacturing saw a large decline on the goods side, it was more than offset by 105,000 new jobs across mining and construction. On the services side, 44,000 job losses across financial activities and business services were set against more than 150,000 hires in leisure and hospitality, 32,000 in trade and transportation and 69,000 in education and health.
April’s overall increase was the largest since July. ADP hasn’t been the best predictor of NFP in the pandemic era, but an underwhelming report from the BLS on Friday would stand in stark contrast to these figures which, even as they reflected subdued activity at factories and white color job cuts, were very robust.
ADP’s chief economist, Nela Richardson, offered an assessment that could be interpreted as a nod in the direction of higher soft landing odds. Pay growth receded in April as hiring picked up, suggesting workers are coming back and demanding less of their new employers in the process.
“The slowdown in pay growth gives the clearest signal of what’s going on in the labor market right now,” Richardson said Wednesday. “Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines.”
At 13.2%, pay growth for job switchers (ADP calls them “changers”) was still very high, but the YoY pace fell a full percentage point versus March and was the slowest 12-month gain since November of 2021.
The gap between pay growth for “changers” and “stayers” was 6.5pp. That was the least since October of 2021.
Notably, median annual pay growth for leisure and hospitality fell below 9%, even as hiring in the sector steamed ahead.
The data came on the heels of a JOLTS report which showed job openings fell more than expected for a second consecutive month, while the gap between vacancies and hires narrowed. It also suggested a key ratio watched by the Fed (job openings to Americans counted as officially unemployed) likely fell to the lowest since October of 2021.
On Wednesday, ADP’s Richardson said her data “shows fewer people are switching jobs” in the US.
