U.S. private payrolls post biggest gain in seven months in April

WASHINGTON (Reuters) – U.S. private payrolls increased by the most in seven months in April as companies rushed to boost production amid a surge in demand, suggesting the economy gained further momentum early in the second quarter, powered by massive government aid and rising COVID-19 vaccinations.

FILE PHOTO: People line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston/File Photo/File Photo/File Photo

Private payrolls rose by 742,000 jobs last month, the largest gain since last September, the ADP National Employment Report showed on Wednesday. Data for March was revised higher to show 565,000 jobs added instead of the initially reported 517,000. Economists polled by Reuters had forecast private payrolls would increase by 800,000 jobs in April.

“The job market is picking up steam in the spring as consumers are more comfortable going out given vaccinations and stimulus checks,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.

The increase in hiring was across the board, with the leisure and hospitality sector adding 237,000 jobs. Manufacturers hired 55,000 workers and payrolls in the construction sector increased by 41,000 jobs.

U.S. stocks were set to open higher. The dollar was steady against a basket of currencies. U.S. Treasury prices were mostly lower.


The ADP report is jointly developed with Moody’s Analytics. The report has a poor track record predicting the private payrolls count in the government’s more comprehensive, and closely watched, employment report because of methodology differences.

But April’s surge in hiring aligns with a recent improvement in labor market conditions, including a sharp decline in new claims for unemployment benefits to the lowest level since March 2020 when mandatory shutdowns of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Consumers’ perceptions of the labor market are the strongest in 13 months. That has left economists anticipating that April was another month of blockbuster job growth.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 978,000 jobs last month after rising by 916,000 in March. Most economists were comfortable with their estimates for April’s payrolls count. The Labor Department will publish April’s employment report on Friday.

“The monthly changes in the ADP report have underestimated the monthly changes in the BLS (Bureau of Labor Statistics) report throughout much of the current recovery,” said Daniel Silver, an economist at JPMorgan in New York.

Worker shortages in some industries may have contributed to the ADP private payrolls count coming in below expectations. Companies, especially in the manufacturing industry, are struggling to find suitable workers. A survey from the Institute for Supply Management on Monday showed “panelists continue to note significant difficulties in attracting and retaining labor at their companies’ and suppliers’ facilities.”

Consumer spending accelerated sharply in the first quarter. The economy grew at a 6.4% annualized rate last quarter following a 4.3% pace of expansion in the fourth quarter.

The government has provided nearly $6 trillion in pandemic relief over the past year. Americans over the age of 16 are now eligible to receive the COVID-19 vaccine. Many states, including New York, New Jersey and Connecticut, are lifting most of their coronavirus capacity restrictions on businesses.

Most economists expect double-digit GDP growth this quarter, which would position the economy to achieve growth of at least 7% this year, which would be the fastest since 1984. The economy contracted 3.5% in 2020, its worst performance in 74 years.

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