U.S. companies add fewest jobs since 2010 as economy shows weakness
U.S. employers in May added the fewest workers in any month since 2010, suggesting a potential pullback in the labor market amid weakness in some parts of the economy.
Private payrolls increased by 27,000 in May after a downwardly revised 271,000 gain in April, according to data released Wednesday by the ADP Research Institute. That compares with the median forecast of 185,000 in a Bloomberg survey of economists.
The data suggest payroll gains in Friday’s jobs report from the Labor Department could be lower than expected, which might add to investor bets that the Federal Reserve will cut interest rates this year to shore up the economy.
A recent string of weak reports on retail sales, factory orders and home purchases indicate growth is slowing as the trade war weighs on businesses.
“Job growth is moderating,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. Moody’s produces the figures with ADP. “Labor shortages are impeding job growth, particularly at small companies, and layoffs at brick-and-mortar retailers are hurting.”
In a separate report issued Wednesday, the UCLA Anderson Forecast expects California’s unemployment rate will remain low but job growth will slow over the next two years.
Nationally, job creation in goods-producing industries slumped, highlighted by a 36,000 decline in construction — the biggest drop since 2010 — along with losses in manufacturing and in natural resources and mining, according to the report. Small firms are also feeling pain, with payrolls at businesses with fewer than 50 employees dropping by 52,000, the most in nine years.
The employment picture may face further head winds in coming months as companies deal with potential supply-chain issues and pinched margins amid intensifying tensions with some the U.S.’ largest trading partners. President Trump has threatened to impose tariffs on all imports from Mexico starting Monday, with the levies escalating unless Mexico stops migrants from crossing illegally into the U.S.
Treasurys rallied after the report, sending the 10-year note’s yield down to 2.08%, while stock futures pared gains and the dollar fell.
Service providers added 71,000 jobs in May — the least since 2017 and down from 223,000 in April — highlighted by a 33,000 increase in education and health services. Companies employing 500 or more workers increased staffing by 68,000 jobs, up from the prior month, while payrolls grew by 11,000 at businesses with 50 to 499 employees, a nine-year low.
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