US private sector adds 173k jobs in May

The US private sector added 173,000 jobs in May, according to data released by private consultancy ADP.

This was a touch light compared to expectations of 175,000.

Meanwhile, the April figure was revised up to show a 166,000 increase from 156,000.

By sector, goods-producing employment dropped by 1,000 jobs in May after shedding a revised 7,000 in April, while the construction industry added 13,000 jobs, in line with the previous month. Manufacturing shed 3,000 jobs after losing 10,000 in April.

The ADP estimate did not include a six-and-a-half week strike at Verizon.

Mark Zandi, chief economist of Moody's Analytics, said: “Job growth has moderated this spring as energy companies and manufacturers shed jobs. Retailers are also more circumspect in their hiring. Despite the recent slowdown, job growth remains strong enough to reduce underemployment.”

David Morrison, senior market strategist at SpreadCo, said: “Analysts are generally wary of taking the ADP data as a heads-up for non-farm payrolls as the latter tends to be much more volatile than the ADP release. That is why last month’s unexpected drop in the ADP number was such a surprise, particularly as it foreshadowed a similar downside miss in the NFP.

“But May’s data releases have been further complicated by the strike by Verizon workers. By some estimates this could take as much as 35,000 off the headline numbers. This should be factored in to tomorrow’s expectations. A big downside miss may cause initial algo-driven volatility. But ultimately a bad number is unlikely to persuade investors that the Fed will give up on a summer hike.”