US private employers hired the fewest number of workers in three years in April, which could raise concerns that a recent sharp slowdown in economic growth was spilling over to the labor market.
Other data on Wednesday showed a steep decline in the trade deficit in March. While the smaller trade gap could be a potential boost to the weak first-quarter economic growth estimate, the plunge in imports of goods to their lowest level since 2010 hinted at sluggish domestic demand.
The ADP National Employment Report showed private payrolls increased 156,000 last month, the smallest gain since April 2013, after rising 194,000 in March.
The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for April due on Friday.
“The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors,” Mark Zandi, chief economist of Moody’s Analytics, said. “One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring.”
According to a Reuters survey of economists, nonfarm payrolls likely increased by 202,000 jobs in April after rising 215,000 in March. The unemployment rate is forecast holding steady at 5.0 percent.
The labor market has so far weathered the sluggish economy, which has been slammed by weak exports as a result of a strong dollar and tepid global demand. Growth has also been eroded by relentless aggressive spending cuts in the energy sector in the aftermath of last year’s plunge in oil prices, as well as efforts by businesses to reduce an inventory overhang.
The economy slowed to an annual growth pace of 0.5 percent in the first quarter after expanding at a 1.4 percent rate in the fourth quarter.
The ADP report showed employment in the goods-producing sector dropped by 11,000 jobs in April, with manufacturing payrolls declining by 13,000 positions. The construction industry added 14,000 jobs last month.
Services industry employment increased by 166,000 jobs in April, down from 189,000 in March.
The dollar briefly fell against a basket of currencies on the ADP report. Prices for U.S. government debt trimmed losses.
TRADE DEFICIT NARROWS
In a second report, the Commerce Department said on Wednesday the trade deficit fell 13.9 percent to $40.4 billion in March, the smallest since February 2015, also as exports fell.
The government reported last month that trade subtracted 0.34 percentage point from first-quarter gross domestic product. The smaller-than-forecast trade gap suggests that the advance GDP growth estimate could be bumped up when the government publishes its revised estimate later this month.
The lingering impact of the dollar’s past rally and soft global demand have hampered exports, but there are signs that some of the drag is starting to fade. The Institute for Supply Management reported on Monday that a gauge of export orders received by U.S. manufacturers rose in April for a second straight month, reaching its highest level since November 2014.
The dollar has weakened 3.8 percent against the currencies of the United States’ main trading partners so far this year, which should improve the competitiveness of U.S.-made goods on international markets. The greenback gained 20 percent on a trade-weighted basis between June 2014 and December 2015.
In March exports of goods slipped 1.6 percent to $116.8 billion. Overall exports of goods and services fell 0.9 percent to $176.6 billion. Exports of food were the lowest since September 2010. Exports of industrial supplies and materials fell to a six-year low, while consumer goods exports were the lowest since March 2013.
Exports to the European Union surged 9.2 percent, while goods shipped to Canada and Mexico jumped 10.9 percent and 6.1 percent, respectively. Exports to China climbed 11.2 percent.
Imports of goods tumbled 4.3 percent to $175.3 billion, the smallest since December 2010.
Weak imports potentially signal slackening domestic demand, but could also be related to ongoing efforts by businesses to reduce an inventory glut. Lower oil prices and increased domestic energy production are also helping to keep the import bill in check.
In March, imports were held down by industrial supplies and materials imports which hit their lowest level since April 2004. Petroleum imports were the lowest since September 2002, even as oil prices rose to an average $27.68 per barrel.
A third report from the Labor Department showed productivity, which measures hourly output per worker, declined at a 1.0 percent annual rate in the first quarter after shrinking at a 1.7 percent pace in the fourth quarter.
Weak productivity helps explain the divergence between lackluster economic growth and the fairly robust labor market.