Private companies added 275,000 jobs in April, handily beating expectations. More than 80 percent of the jobs were created by small- and medium-sized businesses.
The data comes from a monthly survey by ADP, a payroll processor, which is released two days ahead of the official job growth estimates by the Bureau of Labor Statistics (BLS).
The BLS reported private job growth of 182,000 in March, above the 151,000 estimated by ADP.
The two sources often differ, but generally average about the same over several months.
Mark Zandi, chief economist at Moody’s Analytics, which cooperates with ADP on the reports, said the April job gains “overstate the economy’s strength,” but still make the case for continued expansion.
“The bulk of the overall growth is with service providers, adding the strongest gain in more than two years,” he said in a May 1 release (pdf). “The job market is holding firm, as businesses work hard to fill open positions. The economic soft patch at the start of the year has not materially impacted hiring.“
Economists surveyed by Reuters had forecast that the ADP National Employment Report would show a gain of 180,000 jobs, with estimates ranging from 141,000 to 225,000.
Aside from strong growth in the service sector, construction added 49,000 jobs while manufacturing inched up by 5,000. Mining and natural resources sunk by 2,000 jobs.
Despite a more than 40 percent hike in oil prices since the late December 2018 low, U.S. oilers have halted production on more than 9 percent of rigs in the same period.
There’s a three-month lag time between oil price trends and the U.S. oil industry response, said Phil Flynn, senior market analyst with the Price Futures Group.
“What we are seeing in declining rigs is the reaction to crashing oil prices at the end of last year,” he said in an email. “In the first quarter many shale guys got burned so they [sat] in pullback mode even as prices rebounded. Now they need confidence that prices will stay strong. So we may see it take about 3 months from now to really reverse the trend.”
President Donald Trump, as well as the director of Trump’s National Economic Council Larry Kudlow, urged the Federal Reserve to cut interest rates to boost the economy further as personal consumption expenditures inflation index didn’t increase at all in March after edging up 0.1 percent in February, excluding the volatile food and energy components.
The Fed had a meeting on April 30 and May 1 and was expected to keep the borrowing rates unchanged after raising them four times in 2018.
The unemployment rate stood at 3.8 percent in March; the April number will be released by the BLS on May 3 together with the job growth data.
Small business optimism somewhat increased in March and remains in the positive numbers despite weakening between November 2018 and January, according to the index created by the National Federation of Independent Business.
Reuters contributed to this report.