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Private Sector Jobs Grew By Only 38,000 in May On Expectation of 175k


Companies in the U.S. added fewer workers than forecast in May, a sign that job growth is struggling to gain momentum, data from a private report based on payrolls showed today.

Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 175,000 advance for May.

Such gains in employment are insufficient to help the world’s largest economy accelerate after a surge in food and fuel costs earlier this year. Businesses added 207,000 jobs last month after a 268,000 gain in April and the jobless rate dipped to 8.9 percent from 9 percent, economists project a Labor Department report to show in two days.

“Although labor conditions remain weak we anticipate further improvement taking hold in the coming months as conditions gradually improve,” Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, said before the report. “ As conditions improve, we expect to see some further downward pressure in the unemployment rate.”

Estimates for the ADP data ranged from increases of 125,000 to 200,000, according to the Bloomberg survey of 37 economists.

Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in February, when it understated the gain in jobs by 5,000. The estimate was least accurate in December, when it overestimated the increase in employment by 184,000.

Another report today showed employers announced fewer job cuts in May than a year earlier, signaling the labor market is improving. Planned firings dropped 4.3 percent to 37,135 last month from May 2010, according to figures from Chicago-based Challenger, Gray & Christmas Inc. Government and nonprofit agencies had the most cutbacks.

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