ADP's private payrolls report released Wednesday showed the U.S. labor market remained resilient in April despite the ongoing economic and geopolitical headwinds, though job gains came in a touch below expectations. While not perfectly correlated with the Labor Department's non-farm payrolls report, the data is widely viewed as a directional indicator of labor market trends.
The U.S. dollar, which was weaker in the European session, cut some of the losses ahead of the ADP report but flatlined thereafter. The U.S. index futures also stayed in positive territory, as traders reacted to artificial intelligence-levered chipmaker AMD’s earnings.
Job Gains Accelerate but a Touch Soft
Private payrolls expanded by 109,000 in April, sharply higher than the 61,000 additions in the previous month. Economists, on average, had anticipated private payroll gains of 118,000 for April.
The service-providing industries accounted for the bulk of the upside (94,000), while goods-producing sectors added 15,000 jobs. Education and health services recorded job gains of 61,000.
Pay growth for job-stayers climbed 4.4% year over year (YoY) in April, while that for job-changers increased 6.6%.
"Small and large employers are hiring, but we're seeing softness in the middle," said Dr. Nela Richardson, chief economist, ADP. "Large companies have resources to deploy, and small ones are the most nimble, both important advantages in a complex labor environment."
What it Means for Friday’s Jobs Data
Even with a stronger ADP print, the official Bureau of Labor Statistics’ (BLS) non-farm payroll increase is expected to underperform the ADP figure, with analysts forecasting a roughly 73,000 nonfarm payroll increase for April. This compares to far bigger gains of 178,000 for March.
Labor market strength remains a key factor for the Federal Reserve in shaping monetary policy. The U.S. central bank, led by Chair Jerome Powell, has kept interest rates unchanged at all three meetings this year as policymakers assess persistent inflation risks, partly driven by higher energy prices linked to the U.S.-Iran conflict.
