Service sector boosted jobs picture in May: ADP

Private sector job creation swung higher in May after a lackluster April, with companies adding 201,000 positions for the month, according to payroll firm ADP.

The number was just about in line with expectations for a 200,000 gain thanks largely to a big gain in service sector jobs. (Tweet this) The group added 192,000 positions, a big gain from the 164,000 the previous month.

Wall Street is keeping a close eye on the jobs market for clues about when the Federal Reserve will start hiking interest rates. Consensus is split between the first hike in nine years happening in September or December.

ADP’s report, put together in conjunction with Moody’s Analytics, helps bolster the case that the labor market is improving enough for the U.S. central bank to begin its tightening cycle. The Fed cut short-term rates to near-zero at the depths of the financial crisis in late 2008.


The numbers come two days before the government releases its nonfarm payrolls report, which is expected to show the economy created 227,000 new position overall in April. Economists sometimes use ADP’s numbers to alter their estimates of the Labor Department’s official count.

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Job creation was skewed heavily toward small businesses in April, with 122,000 of the new positions created in firms that employ fewer than 50 people. Large businesses, with at least 500 employees, added just 13,000 to the total.

Moody’s economist Mark Zandi acknowledged that job creation overall has slowed some but remains at a healthy pace.

“If we just maintain this rate of growth, by almost every estimate we will be back to full employment by this time next year,” Zandi told CNBC.

Get the market reaction here.

As for industries, trade, transportation and utilities led the way with 56,000 new jobs, with professional and business services next at 28,000 and construction adding 27,000.

The one blight on the report was manufacturing, which lost 5,000 positions.

Also, April’s disappointing count was revised lower, down 4,000 to 165,000.

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