Private sector firms add 32,000 jobs in April, ADP says

The job market is looking up, according to a report on the private sector Wednesday and a separate analysis by the Treasury Department’s top economist.

Companies in the U.S. private sector added 32,000 jobs in April, according to the monthly employment report by Automatic Data Processing Inc.

Coming two days before the Labor Department reports on changes in the nation’s nonfarm payrolls for April, the report added to the sense that there would be a sizable increase in jobs.

Economists are expecting a 185,000-job increase in nonfarm payrolls. It would be the biggest gain in three years.

In testimony to the Joint Economic Committee of Congress on Wednesday, Alan Krueger, the assistant Treasury secretary for economic policy, said the labor market was beginning to show signs of “sustained improvement.”

Krueger said new data showed that employment at large firms had increased in five of the last six months — “a possible early sign of durable job growth.”

The unemployment rate, however, could be hard to bring down for a while. The economists in the MarketWatch survey ahead of Friday’s report, on average, predict that the unemployment rate will stay at 9.7% for the fourth straight month in April.

Labor demand at small firms has continued to be weak, Krueger said. He told reporters that it was too soon to know whether the unemployment rate peaked at 10.1% in October.

The unemployment rate could retest the cyclical high if workers who have dropped out of the labor force flood back in. About 3.5 million Americans dropped out of the labor force during the recession, and many of them will compete for jobs with the 15 million who are officially classified as unemployed.

The increase in ADP employment was close to the consensus forecast of economists surveyed by MarketWatch, in which they had called for an increase of 35,000.

ADP said there had been job gains over the last three months as a result in an upward revision to March. Job gains that month rose a revised 19,000, up from the initial estimate of a decline of 23,000.

Joel Prakken, chairman of Macroeconomic Advisers, a St. Louis firm that helps prepare the report, described the increases as “grudging.” Monthly job gains have averaged 18,000 over the last three months.

The ADP report does not include federal workers or temporary census workers. Payrolls are expected to expand in April and May with the census hiring temporary workers it needs to complete the door-to-door canvass of people who didn’t return their census forms by mail.

Employment in the service-providing sector in April rose by 50,000, and employment in factories rose 29,000. The goods-producing sector declined 24,000.

Medium-size businesses saw employment rise by 17,000. Large firms added 14,000, and small firms had a slim 1,000 increase.

Also Wednesday, the Institute for Supply Management reported that its service sector index held steady at 55.4 in April from the previous month, a level that indicates ongoing growth.

Robb writes for MarketWatch.com/McClatchy.