WASHINGTON: US companies hired far fewer workers than expected in May, but an acceleration in services sector growth supported views the economy was regaining strength after sagging early this year.
While other data yesterday showed the trade deficit hit its widest point in two years in April, a rise in imports to record highs underscored the economy’s resilience. “May job growth may have been a little less than expected but with imports rising, it looks like the economy is moving forward solidly,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. Private employers added 179,000 jobs to their payrolls in May, the ADP National Employment Report showed, compared to 215,000 jobs in April. That was below economists’ expectations for a gain of 210,000 jobs in May.
It was released ahead of the government’s comprehensive employment report tomorrow. The ADP report, however, does not have a good record predicting nonfarm payrolls. A survey forecast payrolls rising 218,000 after a 288,000 increase in April.
Separately, the Institute for Supply Management said its services sector index rose to 56.3 last month as new orders and business activity jumped. It was the highest reading in nine months and was up from 55.2 in April.
In another report, the Commerce Department said the trade gap increased 6.9 percent to $47.2bn as imports hit a record high. It was the largest deficit since April 2012 and followed a $44.2bn shortfall in March.
US financial market were little changed after the data. When adjusted for inflation, the trade deficit increased to $53.8bn from $50.9bn in March, suggesting that trade remained a drag on growth in the second quarter.
Trade subtracted almost a percentage point from first-quarter gross domestic product growth. Reuters