WASHINGTON -- U.S. companies added the fewest jobs in nine years, a private survey found, as manufacturers, construction and mining companies cut workers. U.S. service industries expanded at the best pace since February.
Payroll processor ADP said Wednesday that businesses added just 27,000 jobs in May, the fewest since March 2010. Jobs in construction fell 36,000 and in manufacturing by 3,000.
The figures come just after ADP reported strong hiring in April, when companies added 271,000 jobs, the most in nine months. Mark Zandi, chief economist at Moody's Analytics, which helps compile the data, said the broader hiring trend is probably closer to the average of the two month's gains, at around 150,000.
That is down from last year's average monthly gains of about 225,000.
"The economy's growth rate has slowed sharply from last year," Zandi said. "That is now starting to show up in the job market."
Growth could slow to as low as 1.5% at an annual rate in the April-June quarter, down from a nearly 3% pace last year. A weaker global economy and fading stimulus from the 2017 tax cuts is dragging on the U.S. economy. The tariffs on Chinese imports also may be causing companies to delay their spending on large equipment and machinery.
Small businesses, those companies with fewer than 50 employees, lost 52,000 jobs last month, while midsize firms added 11,000 and large companies -- those with 500 or more -- gained 68,000.
Small companies have struggled to add workers as the number of unemployed has dwindled. Larger companies typically are able to offer higher pay and more benefits and are better able to hire in a tight job market.
The ADP figures don't include government hiring and frequently diverge from the government's official report, which is scheduled to be released Friday. Economists expect that report will show job gains of 185,000, while the unemployment rate remains at a nearly 50-year low of 3.6%.
For the service industries category, the nonmanufacturing index rose to 56.9 in May, according to an Institute for Supply Management survey Wednesday that topped almost all economist estimates in Bloomberg's survey. Three of four components advanced, led by the employment gauge rising the most in two years. New orders and business activity also improved, as 16 of 18 industries reported growth.
The fresh signs of strength come after two months of weaker readings on service industries that account for about 90% of the economy. The gain contrasts with a string of softer reports on retail sales, factory orders and home purchases, which along with intensifying trade tensions have spurred investors to bet the Federal Reserve will cut interest rates this year to shore up growth.
The institute's gauge of supplier deliveries fell below 50 for the first time since 2015, indicating businesses are facing fewer supply-chain bottlenecks. Order backlogs also declined to a four-month low.
The imports index slid the most in nearly four years as export orders cooled, signs of continued fallout from an intensifying trade war with China that's adding to uncertainty for companies. The inventories measure advanced, suggesting a buildup as companies strove to avoid tariffs, and respondents said they felt the levels were too high.
"Respondents are mostly optimistic about overall business conditions, but concerns remain about tariffs and employment resources," Anthony Nieves, chairman of the nonmanufacturing survey, said in a statement. "The non-manufacturing sector continues to experience a slight uptick in business activity, but it is still leveling off overall."
The prices-paid index edged down to 55.4, signaling softer inflation pressures.
The gauge of business activity rose to 61.2, new orders increased to 58.6, and supplier deliveries dipped to 49.5.
Information for this article was contributed by Christopher Rugaber of The Associated Press and by Katia Dmitrieva of Bloomberg News.
Business on 06/06/2019
Print Headline: May's new hirings least in 9 years