Economy Watch: ADP Says May Employment Pace Lackluster Indeed
- Jun 02, 2011
The equity markets were all atwitter–that is, stock-index futures plunged–after ADP Employer Services reported on Wednesday morning that U.S. employers added only 38,000 jobs in May, compared with a revised ADP figure of 177,000 in April, which is the smallest increase reported by the payroll specialist since last September. The May figure was drastically less than anticipated.
Then again, ADP is often at odds with the U.S. Bureau of Labor Statistics, which will publish official employment stats on Friday. April’s ADP figures, even the revised ones, were 67,000 lower than the official numbers. Economists are still expecting the BLS report to show employment growth of over 200,000 during May.
In fact, ADP has sometimes differed from the BLS quite radically, such as during December 2010, when it overestimated an employment uptick by some 184,000. But the company’s estimates have also been fairly close in recent months as well: the ADP number was only 5,000 jobs below the BLS number in February 2011. So will ADP be aligned with BLS this month?
Metro Area Unemployment Dropped in April
There were other official employment numbers released by the U.S. Department of Labor on Wednesday, ones that reflected the impact of the relatively healthy month for hiring that April proved to be. In its monthly survey of U.S. metro areas, Labor said that the unemployment rates of 339 areas dropped in April, and only rose in 20 areas. The rate was unchanged in 13 metros.
Some of the drops stemmed from places near tourist destinations adding workers in anticipation of the summer travel season. Salinas, Calif., which serves Monterey and Carmel, scored the steepest decline in unemployment, down from 16.5 percent in March to 12.6 percent the next month. Such is the volatility inherent in this particular measurement of employment, which isn’t seasonally adjusted.
Areas with manufacturing bases, including many MSAs in the Midwest, still showed a drop in unemployment in April, but not as rapidly as in previous months. That might indicate that the industrial expansion might not be quite as strong in mid-2011 as in earlier months. A separate survey by the Institute for Supply Management, also released on Wednesday, confirmed that manufacturing expanded in May at its slowest rate in nearly two years.
Construction Spending Sees Small Uptick
In a mild surprise, U.S. construction spending saw an uptick in April, rising 0.4 percent, according to the U.S. Department of Commerce on Wednesday. But that was only a month-over-month improvement. Compared with the same month last year, construction spending is off 9.3 percent.
Private projects led the way, with private spending for construction increasing 1.7 percent in April. Public construction is still on the decline, however, as monies for projects evaporates in these times of austerity. Spending for public projects dropped 1.9 percent in April.
As expected, Wall Street apparently didn’t like the ADP numbers one little bit. The Dow Jones Industrial Average took a thumping to the tune of 279.65 points, or 2.22 percent down. The S&P 500 lost even more, down 2.28 percent, and the Nasdaq lost most of all, down 2.33 percent.