The numbers: U.S. private-sector employment surged by 978,000 in May, according to the ADP National Economic Report released Thursday. The gain was well above forecasts from economists surveyed by the Wall Street Journal who expected a gain of 680,000 jobs.
It is the largest monthly gain since last June when the economy began to reopen after the first wave of the coronavirus pandemic. The private-sector added a revised 654,000 in April, down from the prior estimate of 742,000.
Big picture: Economists expect a rebound in the Labor Department’s May nonfarm payrolls, due Friday, after a surprisingly subdued 266,000 gain in April on a seasonally adjusted basis.
The Federal Reserve’s Beige Book reported Thursday that businesses are adding to their payrolls at a steady pace in May.
The ADP survey is a poor bellwether month-to-month historically for the government’s official employment report, but they are both moving in the same direction this year.
Economists forecast an overall increase of 671,000 new jobs in May in the Labor Department data due Friday. The tally, to be released Friday at 8:30 a.m. Eastern, also includes government workers.
What happened: In the ADP data, the service sector added the lion’s share of the May increase, adding 850,000 jobs. The goods producing sector added 128,000. Manufacturing firms added 52,000 workers.
Hiring was up across the board. Large companies added 308,000 new employees. Mid-sized businesses filled 338,000 jobs. And small businesses hired 333,000 people.
What are they saying? “The gain in the ADP measure of private employment in May would appear to pour cold water on the idea that widespread labor shortages are continuing to weigh on hiring,” said Andrew Hunter, senior U.S. economist at Capital Economics.
Market reaction: Stocks
opened sharply lower Thursday after eking out small gains in the prior day’s trading.