Private firms added approximately 135,000 jobs in May, according to estimates released Wednesday from payroll firm ADP. That comes in well below consensus estimates of approximately 171,000, according to Bloomberg.
Private job growth of 135,000 may not even be enough to keep up with population growth and, if the estimate is accurate, would represent a slowdown. In April, the government reported that private firms added 176,000 jobs.
Such slow job growth "would be a break from some of the stronger data we've been getting from BLS in recent months," noted Mark Zandi, chief economist at Moody's Analytics, which co-produces the report, in a call with reporters Wednesday. He added that the estimate may signal deceleration in job growth, from around 175,000 new jobs per month to average growth closer to 150,000 per month.
Though there's no single "smoking gun" factor responsible for any pullbacks in growth, Zandi said, recent tax increases and cutbacks in government spending, such as the sequestration cuts that went into effect in March, are contributing factors.
ADP's estimate shows that professional and business services posted strong growth in May, adding 42,000 jobs, and that the trade, transportation, and utilities industry added 31,000 jobs. Finance saw a 7,000-job boost, and construction added 5,000. Manufacturing, meanwhile, lost 6,000 jobs.
Still, it may not be time to fear a slowdown. The ADP estimate is released days before each month's jobs report, and is often viewed as a preview of the latest Labor Department jobs estimate. However, recent ADP estimates have come in below government estimates. Acknowledging that tendency to undershoot, Zandi estimated that Friday's total payrolls figure will show 155,000 to 160,000 new jobs in May, which would be roughly on par with April's initial estimate.
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- Mark Zandi