Private sector adds 38,000 jobs in May

The private sector added far fewer jobs than expected in May with declines in manufacturing and goods-producing jobs, according to the ADP National Employment Report. Automatic Data Processing Inc. said nonfarm private payrolls increased a mere 38,000 on a seasonally adjusted basis last month. That’s down from a slightly revised 177,000 for April. The payroll giant conducts the monthly survey, which excludes federal jobs, in conjunction with Macroeconomic Advisers. “Although we continue to see jobs being added to the economy, this month’s job figures show that employers believe we are not out of the woods yet when it comes to decisions on hiring,” according to Gary Butler, president and chief executive of ADP. Analysts surveyed by Briefing.com expected jobs growth of 190,000 for May. The private sector added 207,000 new jobs in March and 217,000 in February. Joel Prakken, chairman of Macroeconomic Advisers, said the deceleration in employment growth is disappointing but not entirely surprising, as first-quarter GDP growth slowed to 1.8%, which is a rate that “normally would be associated with very weak growth of employment.” After seven months of gains, manufacturing jobs fell by 9,000 last month, according to ADP. Employment in the goods-producing sector decreased by 10,000 in May, following six consecutive months of increases. The service sector has now added jobs for 17 months tacking on another 48,000 last month. Construction jobs declined by 8,000 in May, erasing gains of the prior months, according to ADP. The sector has shed more than 2.1 million jobs since January 2007. Capital Economics Chief U.S. Economist Paul Ashworth said May’s slowdown confirms labor market conditions have deteriorated over the past few weeks. He said it’s possible the severe storms and tornadoes of last month were a factor, as well as temporary lay offs by auto manufacturers, as the disruption to parts supplies worsens. “That said, the ADP sectoral breakdown shows that the biggest factor behind the drop off in net job creation was a slowdown in growth in the service sector,” according to Dales. His firm expects federal nonfarm payrolls to show gains of 150,000 when the Labor Department reports May data on Friday. Write to Jason Philyaw.