April ADP Employment Report: 169,000 Private-Sector Jobs Added (Includes Live Conference Call Notes)

From ADP:

Private sector employment increased by 169,000 jobs from March to April according to the April ADP National Employment Report®.

… Payrolls for businesses with 49 or fewer employees increased by 94,000 jobs in April, down from 105,000 in March. Employment among companies with 50-499 employees increased by 70,000 jobs, up from 64,000 the previous month. Employment gains at large companies – those with 500 or more employees – decreased slightly from March, adding 5,000 jobs in April, down from 6,000. Companies with 500-999 employees added no jobs, after adding just 2,000 in March. Companies with over 1,000 employees added 5,000 jobs, a small improvement from 4,000 the previous month.

… “April job gains came in under 200,000 for the second straight month,” said Carlos Rodriguez, president and chief executive officer of ADP. “Companies with 500 or more employees had the slowest growth.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Fallout from the collapse of oil prices and the surging value of the dollar are weighing on job creation. Employment in the energy sector and manufacturing is declining. However, this should prove temporary and job growth will reaccelerate this summer.”

March was revised down from 189K to 175K. February’s original 212K is now 200K.

Today’s number is about 40 percent below the 279K monthly average seen in November and December.

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CONFERENCE CALL NOTES:

Zandi: Number is on the soft side, reflecting two key things — first, ill effects of collapse in oil prices in the energy sector. “All-in” job losses in the sector will continue to the point of a quarter-million jobs. It’s a one-time adjustment. Consequences will abate by late summer into fall, when we will see benefits of lower oil prices on consumer spending. By end of year, the net effect will be decidedly positive.

Second is the strong dollar. Up 15% in short time. Will continue on for most of the remainder of the year and cost the economy about a quarter-million “all-in” jobs, largely in manufacturing.

Thinks oil prices have hit bottom and energy sector downdraft will abate.

Dollar rally has also abated a bit vs. euro and yen.

Rest of the economy, i.e., services, construction, housing are fine, and that will become more clearly evident in the fall, and we’ll get back to 250,000 job per month.

So this is a temporary lull in job growth.

Large company job growth is taking a hit, as they are more affected by the negative factors.

2015 will be a good year for single-family housing.

Even at this rate of job growth of 175K/mo, it will still be working off some of the unemployment and under-employment. So unemployment will continue to decline, but still get to full employment by end of 2016 (Mid-2016 if we return to 250K/mo.).

Wage growth feels like it’s finally picking up, as seen in BLS Employment Cost report.

Anything below 200K per month is disappointing.

QUESTIONS:

Chris Rugaber, AP — re job losses in energy.

A. at the front-end of energy production, but lots of ripple effects.

Starting to spread to other areas, completed by July and August. People in general in affected areas will also pull back. The quarter-million includes direct and indirect effects (i.e., “all-in”). Texas (400K jobs normally) might fall below half that in 2015.

Q. Tom B — duration of ports problems work-through and effect on inventories and GDP.

A. Ports problem cleanup will go thru the summer.

Inventory accumulation has been significant and slowdown in that will drag down 2Q GDP by maybe a half-point. 50 billion in 2Q. 2.0-2.5% is his 2Q GDP prediction.

Vicky at the HIll — just a clarification question.

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UPDATE: Zero Hedge notes that April’s number was the lowest in 15 months, and was miles below analysts’ predictions. Indeed: At Yahoo’s Economic Calender, Briefing.com thought it would be 225K (what were they smoking?); while the “Markets” thought it would be 189K.