US private payrolls increase solidly

7 May, 2021 12:00 AM printer

WASHINGTON: US private payrolls increased 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 vaccinations against Covid-19.

Private payrolls rose by 742,000 jobs last month, 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, report agencies.

Economists polled by Reuters had forecast private payrolls would increase by 800,000 jobs in April.

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 labour market conditions, including a sharp decline in new claims for unemployment benefits to the lowest level since March 2020 when mandatory shutdowns of non-essential businesses were enforced to slow the first wave of Covid-19 infections.

Consumers’ perceptions of the labour 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, non-farm payrolls likely increased by 978,000 jobs last month after rising by 916,000 in March.

The Labor Department will publish April’s employment report on Friday. But 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 labour at their companies’ and suppliers’ facilities”. Consumer spending accelerated sharply in the first quarter.

The economy grew at a 6.4 per cent annualised rate last quarter following a 4.3 per cent pace of expansion in the fourth quarter.

The government has provided nearly US$6 trillion in pandemic relief over the past year. Americans over the age of 16 years 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 per cent, which would be the fastest since 1984. The economy contracted 3.5 per cent in 2020, its worst performance in 74 years.