US private sector adds fewer jobs than expected in November - ADP

Private sector employment in the US rose less than expected in November, according to figures released by ADP on Wednesday.

Employers added 67,000 jobs last month versus expectations of a 140,000 increase. Meanwhile, the October total of jobs was revised down to 121,000 from 125,000.

Small businesses with fewer than 50 employees added 11,000 jobs, while medium-sized businesses with between 50 and 499 employees created an additional 29,000 jobs. Large businesses with 500 or more employees recruited an extra 27,000 people in November.

The goods-producing sector shed 18,000 jobs, while the services sector added 85,000 jobs, with education/health services the biggest contributor, at 39,000.

Mark Zandi, chief economist at Moody’s Analytics, said: "The job market is losing its shine. Manufacturers, commodity producers, and retailers are shedding jobs. Job openings are declining and if job growth slows any further unemployment will increase.”

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said: "In November, the labour market showed signs of slowing. The goods producers still struggled; whereas, the service providers remained in positive territory driven by healthcare and professional services. Job creation slowed across all company sizes; however, the pattern remained largely the same, as small companies continued to face more pressure than their larger competitors."

Michael Pearce, senior US economist at Capital Economics, said: "The disappointing 67,000 rise in the ADP measure of private payrolls in November poses a downside risk to our forecast that the official non-farm payroll figures due on Friday will show a larger 170,000 gain. But the latter will be boosted by a 50,000 rise in auto sector employment as General Motors workers return from strike, which did not affect the ADP figures.

"Overall, this report adds to signs that the labour market is still losing momentum, suggesting that incomes growth and thus real consumption growth will slow a little further in the near term. But it would take a much sharper downturn in employment growth to raise recession fears and prompt the Fed into additional rate cuts. With the survey evidence suggesting economic growth is close to bottoming out, we think a sharp downturn in employment growth is unlikely."