Private sector job growth rises more than expected in April

Hiring by U.S. companies rose more than expected in April as the labor market remained resilient even in the face of higher interest rates and ongoing inflation, according to the ADP National Employment Report released Wednesday morning.

Companies added 192,000 jobs last month, beating the 175,000 increase predicted by LSEG economists but down from the upwardly revised March gain of 208,000.

At the same time, the report showed that wage growth – a key driver of inflation – decelerated last month, with annual pay rising 5%. For workers who changed jobs, wages climbed 9.3%, a steep drop from the 10.1% boost recorded in March.

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Job growth was widespread across sectors last month. 

The leisure and hospitality sector accounted for the most job gains in April with the industry onboarding 56,000 new workers. There were also substantial hiring gains in construction (35,000), education and health services (26,000), trade, transportation and utilities (26,000) and professional and business services (22,000). Hiring fell in just one sector: information, which shed 4,000 positions in April.

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"Hiring was broad-based in April," said Nela Richardson, ADP chief economist. "Only the information sector – telecommunications, media, and information technology – showed weakness, posting job losses and the smallest pace of pay gains since August 2021."

The stronger-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has raised interest rates to the highest level since 2001. Wall Street is watching the labor market closely for signs that it is finally cooling, so the Fed can pivot to cutting interest rates.

Central bank officials have indicated that they anticipate rate cuts will begin later this year, but cautioned they need to see more evidence that inflation is returning to their 2% target.

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The data precedes the release of the more closely watched April jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 243,000 workers, following a gain of 303,000 in March. The unemployment rate is expected to hold steady at 3.8%.

ADP numbers can differ drastically from the official government count and have historically been an unreliable indicator of what's to come.