American Employers Keep the Economy From Stalling Out With 220,000 New Hires in April

A weak GDP report obscures the steady growth of America's employment rolls.

Apr 30, 2014 at 4:50PM

Most months, ADP's (NASDAQ:ADP) private-payroll jobs data is the most important piece of economic news on the day it's released. Today that wasn't the case, as the monthly GDP update, which reported 2014's first-quarter data for the first time, overshadowed everything else. Most market-watchers and economic analysts have focused on the fact that America's economy barely budged in the first quarter, while a deeper dive revealed that Obamacare has all but singlehandedly kept the economy afloat. However, ADP's jobs data, which has been updated to include April's results, shows a somewhat more positive picture:

Adp
Source: ADP.

Last month, ADP reported a new all-time high in American private nonfarm payroll jobs, and the trend of slow-but-steady jobs growth has continued in April, with another 220,000 new jobs on record. April's job additions are the second most of the past year behind last November and are slightly ahead of the median monthly job gain of 202,000 of the past three years. This figure also pushes the average growth in private-payroll jobs seen over the past year up from 190,000 per month, which is where it had been after March's update, to 196,000 per month. This show of modest strength might help to explain why the Dow Jones Industrial Average (DJINDICES:^DJI) closed out the day in positive territory despite a lousy GDP report -- as long as the American economy keeps adding jobs, it's not likely to plunge into recession.

And, contrary to the construction-related weakness seen in the first-quarter GDP report, ADP's sector-by-sector jobs breakdown shows that construction continues to be one of the country's best places to find a job -- 19,000 new construction workers joined America's private employment rosters in April, for a gain of 0.31%. The only sector with a larger month-over-month gain, percentage-wise, was the consistently strong (and far larger) professional-services sector. Over the past year, however, this is more an exception than a rule, as construction jobs have been added at a greater rate than those of any sector for nine of the past 12 months:

Adpsectorgrowthratesapr
Source: ADP.

However, that doesn't mean construction is the real driver of job growth. Its total private-sector figure of 6.05 million employees doesn't come close to the 18.99 million professional-services employees, and it's less than a fourth the size of the massive trade, transportation, and utility sector. These two sectors continue to boast the largest monthly growth in actual jobs, as you might expect in sectors that make up such a large part of the economy:

Adpsectorcumegrowth
Source: ADP.

Nor does it mean that construction has really staged a comeback. The sector has added 202,000 jobs in the past year, but there are still nearly 1.7 million fewer private-sector construction jobs today than there were at the peak of the homebuilding boom in mid-2006. The only sector to show long-term strength continues to be the professional-services sector:

Adpsectorgrowthindexapr
Source: ADP.

The markets and the economy must now look ahead to the authoritative Bureau of Labor Statistics employment report, which will be released this Friday. There has been some grumbling of late that ADP's jobs data is not a reasonable proxy for the BLS report, but a quick comparison of the two reports' non-farm job growth figures shows us what to expect:

Adpvblsupdatesapr
Source: ADP and U.S. Bureau of Labor Statistics.

While ADP has become fond of revising its numbers to pull closer in line with the BLS data, it's not fair to ding its economists without noting that the BLS also issues multiple revisions before finalizing its data. Last month, ADP recorded 17,000 more new jobs than the BLS, and over the past year the average difference has been about 34,000 jobs in one direction or another. We can probably expect roughly 200,000 new jobs in the BLS's nonfarm employment tally for April, which means that the arduous path toward a new all-time nonfarm employment peak should still reach its finish line by June.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.

The Motley Fool recommends Automatic Data Processing. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers