(Bloomberg) — Companies in April added the fewest number of workers in more than a year, a sign progress in the labor market may be moderating along with the economy.
The 169,000 advance in employment was the smallest since January 2014 and followed a 175,000 gain in March that was smaller than initially estimated, according to figures Wednesday from the Roseland, New Jersey-based ADP Research Institute. The median forecast of 43 economists surveyed by Bloomberg called for an April increase of 200,000.
Employers, coming off the biggest year for hiring since 1999, are limiting additions to headcounts as they assess demand following a first-quarter economic slowdown. Smaller payroll gains may extend the time needed to take up slack in the labor market, a precondition for faster growth in wages that have been slow to accelerate.
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"It's disappointing, but I don't think it's necessarily a disaster," said Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida. He's the second-best forecaster of ADP payrolls over the past two years, according to data compiled by Bloomberg. A gain of "169,000 is still pretty good. In a normal situation, that would be great, but we still have a lot of slack that we need to take up from the recession."
Estimates in the Bloomberg survey ranged from payroll gains of 170,000 to 270,000. March's figure was revised down from a previously reported 189,000.
Productivity slump
Another report showed productivity fell in the first quarter, triggering the first back-to-back decline in more than eight years and pushing up worker costs as the world's largest economy nearly stalled. The measure of employee output per hour decreased at a 1.9 percent annualized rate after a revised 2.1 percent drop in the prior three months, a Labor Department report showed Wednesday in Washington.
Goods-producing industries, which include manufacturers and construction companies, decreased headcount by 1,000 in April, according to the ADP report. Construction employment rose by 23,000 and factory payrolls decreased by 10,000. Headcount at service providers rose by 170,000.
Companies employing 500 or more workers added 5,000 jobs. Employment at businesses with 50 to 499 employees increased by 70,000 and the smallest companies boosted payrolls by 94,000, the report showed.
Oil, dollar
"Fallout from the collapse of oil prices and the surging value of the dollar are weighing on job creation," Mark Zandi, chief economist at Moody's Analytics Inc., said in a statement. Moody's produces the figures with ADP.
The ADP report is based on data from businesses with almost 24 million workers on their combined payrolls.
Labor Department data may show on May 8 that payrolls at companies and government agencies climbed 225,000 in April after a 126,000 increase the month prior that was the smallest since December 2013, according to the median estimate in a Bloomberg survey. The jobless rate probably fell to 5.4 percent from 5.5 percent.
Federal Reserve policy makers monitoring labor market progress as they debate the timing of their first interest rate increase since 2006. Fed Bank of Chicago President Charles Evans, a voter on policy this year, said Monday the central bank should wait for more evidence that wages are rising before raising interest rates, and he repeated his call to hold borrowing costs near zero until 2016.
Officials, who dropped a promise in March to be patient on raising rates, say they can act at any FOMC meeting from their gathering on June 16-17 onward. Most expect to move later this year. Rates have been kept near zero since December 2008.
Choice Hotels International Inc. is among companies that are adding jobs. The Rockville, Maryland-based hotel franchiser is hiring for 80 technology positions, including software engineering and technical and business analysis.
With assistance from Kristy Scheuble in Washington.
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