Companies add more jobs but growth disappoints

 Hundreds of job seekers wait in line with their resumes to talk to recruiters (R) at the Colorado Hospital Association health care career fair in Denver April 9, 2013. Credit: Reuters/Rick Wilking


Hundreds of job seekers wait in line with their resumes to talk to recruiters (R) at the Colorado Hospital Association health care career fair in Denver April 9, 2013.
Credit: Reuters/Rick Wilking

reuters_logo

NEW YORK - U.S. companies picked up the pace of hiring in May, but job growth remained sluggish and fell short of economists' expectations as the goods-producing sector shed payrolls.

Separate data on Wednesday pointed to the headwinds the recovering housing market still faces as another surge in interest rates on mortgages last week drove down demand from homeowners to refinance. It was the first time in a year rates have climbed above 4 percent.

Private employers added 135,000 jobs in May, the ADP National Employment Report showed, missing forecasts for a gain of 165,000. April's private payrolls were revised down to an increase of 113,000 from the previously reported 119,000.

"The number was weak," said Mark Zandi, chief economist at Moody's Analytics, which jointly developed the report.

"The ADP (data) is suggesting instead of job growth stepping up, it's actually stepping down as we move into the summer months," Zandi told reporters. "It's not like we're falling off a cliff, it just feels like we're throttling back a little bit."

The pace of economic growth is expected to cool in the current quarter from the 2.4 percent rate seen in the first three months of the year, partly due to fiscal belt-tightening in Washington.

The goods producing sector cut 3,000 jobs in May, with a drop of 6,000 positions at manufacturing firms, which could be partially due to defense spending cutbacks, Zandi said.

Stocks opened lower following the report, while Treasury debt prices added to gains. The dollar was slightly weaker against a basket of currencies.

Separate data showed labor-related costs fell in the first quarter by the most in four years, although the reading appeared to be distorted by a shift in employee compensation during the prior period to avoid a tax hike.

Unit labor costs fell at a 4.3 percent annual rate during the period, revised readings from the Labor Department showed. The government had initially estimated a 0.5 percent gain, and the downward revision confounded analysts' expectations that the reading would remain unrevised.

The ADP figures come two days ahead of the government's more comprehensive labor market report, which includes both public and private sector employment.

That report is expected to show job growth increased only slightly, with nonfarm payrolls seen rising by 170,000 compared to the 165,000 seen in April.

Private payrolls are expected to gain by 180,000 and the unemployment rate is forecast to hold steady at 7.5 percent.

Friday's report will get even more scrutiny than usual with investors trying to gauge when the Federal Reserve may slow its current $85 billion a month bond-buying program, which is aimed at propping up the economic recovery.

"We have been seeing significant differences in ADP and nonfarm payrolls for months but regardless, it still doesn't suggest that the labor market is strong enough for the Fed to start tapering," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

Nervousness that the Fed may taper sooner than had been expected sent fixed 30-year mortgage rates up 17 basis points to average 4.07 percent in the week ended May 31, the Mortgage Bankers Association said.

Last week's interest rate was the highest since April 2012 and the first time rates have been above 4 percent since early May of last year.

Demand for refinancing was hit hardest by the acceleration in rates, with applications slumping 15.0 percent. The gauge of loan requests for home purchases - a leading indicator of home sales - held up relatively better, falling just 1.6 percent.

By Leah Schnurr (Reuters) | Wed Jun 5, 2013 9:50am EDT
(Additional reporting by Angela Moon in New York and Jason Lange in Washington; Editing by Andrea Ricci)

 
 

News Sources

  • ABC
  • Access Hollywood
  • Associated Press
  • BBC
  • Bloomberg
  • Boston Globe
  • C-SPAN
  • CBS
  • Chicago Sun-Times
  • Christian Science Monitor
  • Center for Public Integrity
  • CNN
  • Congressional Quarterly
  • Democracy Now!
  • Digg
  • E! Online
  • Entertainment Weekly
  • Financial Times
  • Forbes
  • Foreign Policy
  • Fortune
  • Front Street Magazine

  • U.S. News, World News
  • Business, Politics
  • Entertainment, Sports
  • Art, Lifestyle
  • Videos And More
  • News Sources

  • Fox News
  • Google News
  • Guardian
  • Huffington Post
  • Independent
  • LA Weekly
  • Los Angeles Times
  • McClatchy
  • Mother Jones
  • National Journal
  • NBC New
  • New York Post
  • New York Times
  • Newsweek
  • Newsy
  • NPR
  • PBS NewsHour
  • People
  • Politico
  • Reuters
  • TPM
  • Washington Post
  • Thanks For Your Support!

    Advertisement
     

    Copyright © 2018 Front Street. All Rights Reserved.