Two days before a government report on unemployment is set to be released, a report from a payroll processor shows 201,000 non-farm, private jobs were added in the U.S. during May, the biggest gain since January.

The latest figure from ADP is an improvement over the 165,000 jobs that were added in ADP's April report, which was the smallest gain so far this year and the second straight month it was below 200,000. The April total was revised downward from 169,000.

“The job market posted a solid gain in May," said Mark Zandi, chief economist of Moody’s Analytics. "Employment growth remains near the average of the past couple of years. At the current pace of job growth the economy will be back to full employment by this time next year.

“The only blemishes," he added, "are the decline in mining jobs due to the collapse in oil prices and the decline in manufacturing due to the strong dollar.”

Change in nonfarm private employment.

Change in nonfarm private employment.

Goods-producing employment rose by 9,000 jobs in May, after adding just 1,000 in April. The construction industry had another good month in May, adding 27,000 jobs, up from 24,000 the previous month. Manufacturing, however, lost 5,000 jobs in May, an improvement from a loss of 8,000 in April.

Service-providing employment rose by 192,000 jobs in May, a strong increase from 164,000 in April.

The report indicates that professional/business services contributed 28,000 jobs in May, down from April’s 35,000. Trade/transportation/utilities grew by 56,000, up from April’s 41,000. The 12,000 new jobs added in financial activities is double the previous month’s 6,000.

A graphic with more employment details for May can be found at the bottom of this story.

Less Growth in May for Service Sector

Meantime, a separate report on the nation’s service sector shows that it fell to its lowest level in a year, although it is still expanding, according to the nation’s purchasing executives.

The Institute for Supply Management Non-Manufacturing Index registered 55.7% in May, 2.1 percentage points lower than the April reading of 57.8%.

A reading above 50 indicates growth; under 50 means contraction.

The Non-Manufacturing Business Activity Index dropped to 59.5%, which is 2.1 percentage points lower than the April reading of 61.6%, but still reflects growth for the 70th consecutive month – albeit at a slower rate. The New Orders Index registered 57.9%, 1.3 percentage points lower than the reading of 59.2% registered in April.

“Overall there has been a slight slowing in the rate of growth for the non-manufacturing sector,” said Anthony Nieves, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee. “Respondents’ comments are mostly positive about business conditions and indicate economic growth will continue."

Of the 16 non-manufacturing industry in the survey, 15 reported growth in May.

“Service activity had been holding relatively steady throughout the first half of the year, but now appears to be joining the general trend of recent economic data with waning top line activity,” said Sterne Agee Chief Economist Lindsey Piegza. “While far from alarming, service activity appears to have taken a large step in the wrong direction amid sluggish household spending and declining confidence in a near-term surge in overall economic activity.”

 


        ADP National Employment Report: Private Sector Employment Increased by 201,000 Jobs in May

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