2021.05.0513:09:00UTC+00U.S. Private Sector Job Growth Accelerates But Misses Estimates In April

Private sector job growth in the U.S. accelerated in the month of April but still came in below economist estimates, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment spiked by 742,000 jobs in April after surging by an upwardly revised 565,000 jobs in March.

However, economists had expected private sector employment to soar by 800,000 jobs compared to the jump of 517,000 jobs originally reported for the previous month.

"The labor market continues an upward trend of acceleration and growth, posting the strongest reading since September 2020," said Nela Richardson, chief economist at ADP.

The report showed notable job growth in the goods-producing sector, which added 106,000 jobs amid increases in both manufacturing and construction jobs.

Employment in the service-providing sector also shot up by 636,000 jobs, with the addition of 237,000 leisure and hospitality jobs helping lead the way higher.

"Service providers have the most to gain as the economy reopens, recovers and resumes normal activities and are leading job growth in April," said Richardson.

She added, "While payrolls are still more than 8 million jobs short of pre-COVID-19 levels, job gains have totaled 1.3 million in the last two months after adding only about 1 million jobs over the course of the previous five months."

The report also showed employment at large businesses surged up by 277,000 jobs in April, while employment at small and mid-sized businesses jumped by 235,000 jobs and 230,000 jobs, respectively.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Economists currently expect employment to jump by 978,000 jobs in April after surging up by 916,000 jobs in May. The unemployment rate is also expected to dip to 5.8 percent from 6.0 percent.

"It's worth stressing that the initial ADP estimate has undershot the official BLS measure of private employment growth in 11 of the past 12 months, and sometimes by a significant margin," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "The likelihood of a strong rebound in public-sector employment, as schools reopen and fiscal aid to state & local governments feeds through, is another reason to expect that overall non-farm payrolls posted a stronger gain last month."