ADP said that manufacturing employment decreased by 10,000 workers in April. This was the second straight monthly decline, with March’s net employment loss of 3,000 employees. Overall, hiring in the sector has been very soft through the first four months of 2015, with employment growth essentially flat. This compares to roughly 18,850 workers added per month on average in the second half of 2014. The current softness has been the result of a number of headwinds in the economy. These challenges include the strong U.S. dollar, weakened export demand, lower crude oil prices, the West Coast ports slowdown, weather, and a cautious consumer.
In the larger economy, nonfarm private businesses added 169,000 employees on net in April, or slightly below the 175,000 gain seen in March. It was the second consecutive month with nonfarm payroll growth below 200,000 – ending 13 straight months with hiring of 200,000 workers or more. As such, April’s report was a bit of a disappointment, with the consensus estimate of 225,000 for the month.
In April, the largest job gains were in trade, transportation and utilities (up 44,000); professional and business services (up 34,000); construction (up 23,000); and financial activities (up 7,000). Small and medium-sized businesses (e.g., those with less than 500 employees) contributed all but 5,000 of the increase in nonfarm private business employment gains in April.
The Bureau of Labor Statistics will release new jobs numbers on Friday. The consensus estimate is for an increase of 220,000 nonfarm payrolls, with the unemployment rate declining to 5.4 percent. Manufacturing hiring is anticipated to be soft at best. Given this report from ADP, look for that consensus estimate to drop a little, perhaps closer to 200,000.
Chad Moutray is the chief economist, National Association of Manufacturers.