Private employers added fewer jobs than expected in April, as a growing sense of “unease” led to a slowdown in hiring, raising concerns about the potential impact of tariffs on economic growth. Data from ADP revealed that private payrolls increased by only 62,000 in April, far below economists’ expectations of 115,000 and a significant drop from the 147,000 new jobs added in March. This marks the smallest increase in private payrolls since July 2024.
Unease Prevails in Hiring Decisions
“Unease is the word of the day,” said ADP chief economist Nela Richardson in the report. “Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment.” The report comes just days before the release of the government’s monthly jobs report on Friday, which is expected to show 133,000 new nonfarm payroll jobs added to the U.S. economy, with the unemployment rate holding steady at 4.2%. This follows a March report showing a robust 228,000 jobs were added, although the unemployment rate edged up to 4.2%.
Slowing Job Openings and Hiring Rates
The latest ADP release comes on the heels of a weaker-than-expected report on job openings for March. Data from the Bureau of Labor Statistics showed that 7.19 million jobs were open at the end of March, a decrease from 7.48 million in February, marking the lowest level of job openings since September 2024. Job openings are now at levels not seen since December 2020, raising concerns about the labor market’s strength. Additionally, the Job Openings and Labor Turnover Survey (JOLTS) reported 5.4 million hires were made in March, a slight increase from February’s 5.37 million, with the hiring rate holding steady at 3.4%. The quits rate, a key indicator of worker confidence, edged up slightly to 2.1% from 2% in February.
Worsening Labor Demand and Economic Concerns
Sarah House, senior economist at Wells Fargo, highlighted that the ratio of job openings to unemployed workers fell to 1.02% in March, the lowest since the post-pandemic labor market recovery began. This means there is now roughly one unemployed worker for every open job, compared to the 2:1 ratio seen during the recovery in 2022. “The decline in this ratio is reflective of a steady weakening in labor demand,” said House. She added that the labor market is in a “fragile stasis” and is vulnerable to further imbalance if the outlook for economic growth continues to deteriorate.
With the labor market showing signs of slowing, all eyes will be on the upcoming jobs report to gauge the full extent of the economic impact of President Trump’s tariffs and other economic factors. The report on Friday morning will provide further insight into the state of the labor market.