US Employers Created 135,000 Jobs In May, According To ADP, Less Than Expected

U.S. employers last month created 135,000 jobs, Automatic Data Processing Inc. (ADP) reported Wednesday, well below the number of jobs analysts had expected and a possible warning sign that Friday's jobs report from the Labor Department could be a disappointment.

Analysts polled by Briefing.com expected, on average, 157,000, up from April's 119,000.

The ADP report is closely watched because it is comes just two days before the Labor Department's unemployment report for May. Analysts expect that report to show 170,000 jobs created in May, up from 165,000 in April.

The estimated gain from March to April was revised down to 113,000, ADP said.

“U.S. private sector employment increased by 135,000 jobs during the month of May 2013, a slight increase over the previous month of April," said Carlos A. Rodriguez, CEO of ADP. "The majority of new jobs in May came from the service-providing sector, which added a total of 138,000 jobs, while the goods-producing sector recorded a loss of 3,000 jobs. Notably, a gain of 5,000 jobs in the construction industry during May was offset by a decline of 6,000 lost jobs in the manufacturing industry.”

The goods-producing sector shed a total of 3,000 jobs in May. Although construction payrolls rose by 5,000 in May, on top of an increase of 8,000 jobs in April, the manufacturing industry recorded a total loss of 6,000 jobs in May.

Service-providing industries added 138,000 jobs in May, an improvement over the April gain of 113,000. However, the gains in May are below the average monthly gain of 156,000 during the first quarter.

Among the service industries reported by the ADP National Employment Report, professional/business services added 42,000 jobs over the month, more than twice as many as in April. Trade/transportation/utilities recorded a gain of 31,000 jobs, while financial activities added 7,000 jobs.

"The job market continues to expand, but growth has slowed since the beginning of the year," said Mark Zandi, chief economist of Moody's Analytics. "The slowdown is evident across all industries and all but the largest companies. Manufacturers are reducing payrolls. The softer job market this spring is largely due to significant fiscal drag from tax increases and government spending cuts."