Private Employers Add 133,000 Jobs in May


Private employers added 133,000 jobs in May, a disappointing number that indicates a slowdown in the U.S. economy, according to the ADP National Employment Report released this morning.

The number of jobs added in April was revised down to 113,000 jobs from the initially reported 119,000 jobs.

"Based on the typical post-World War II recovery, we would expect to see three times the number (of jobs) we see today," said Joel Prakken, chairman of Macroeconomic Advisers LLC, which prepares the widely watched report based on payrolls of clients of Automatic Data Processing Inc. "The real story is that the pop in goods producing employment is over, and the service economy is struggling to give us enough jobs to prevent the unemployment rate from rising."

Almost all of the growth came from service businesses. Here is the breakdown of the source of jobs in May:

--Service providers, +32,000 jobs

--Goods producers (includes manufacturing, construction and mining), +1,000

--Manufacturing, -2,000

--Construction, -1,000

--Financial services (part of the service category), +8,000

--Firms with fewer than 50 employees, +67,000

--Businesses with 50 to 499 employees, +57,000

--Companies with 500+ employees, +9,000

Prakken attributed the modest jobs gains to uncertainty caused by the financial crisis in the Eurozone and to "payback" from stronger than usual job growth in the winter because of unseasonable warm weather.

"Along with those reasons, today's (report) confirms a deceleration in job growth which is hardly surprising given the tepid economic growth; first quarter gross domestic product was 2 percent," he said. "Today's number suggests to me that unless there is another decline in the labor participation rate, it is very unlikely that the national unemployment rate (8.1 percent in April) will go down in the Bureau of Labor Statistics report on Friday."

The BLS report, the government's official jobs report, covers both public and private employers.

ADP President and Chief Executive Carlos A. Rodriguez added, "Over the first quarter of 2012, monthly employment gains averaged just over 200,000. However during the first two months of the second quarter, the average monthly employment gain slipped to 123,000."

Prakken's firm is still forecasting 2.5 percent to 3 percent economic growth for all of 2012, which could bring some job growth toward the end of the year, he said.

However, U.S. employers' hiring decisions are weighed down, he added, by the so-called financial cliff in January that is a combination of tax cuts due to expire at the end of the year and federal spending cuts that will automatically occur if Congress and the Administration don't act.

Despite the uncertainties, Prakken said the U.S. economy is showing some positive trends, such as home sales nationwide picking up "offset by a sharp decline in property values."

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