Unemployment rate forecast to stay steady at 5 per cent
The ADP National Employment Report showed U.S. companies hired just 156,000 people last month, the smallest gain since April 2013. Economists surveyed by Reuters had forecast a gain of 196,000 jobs, with estimates ranging from 116,000 to 225,000.
Private payroll gains in the month earlier were revised down to 194,000 from an originally reported 200,000 increase.
The report is jointly developed with Moody's Analytics.
"The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors," Mark Zandi, chief economist of Moody’s Analytics, said. "One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring."
Despite the marked slowdown in April hiring, Zandi said on a conference call following the report that he does not believe underlying U.S. job growth is materially different from its recent trend. Other labor market indicators, such as the weekly report on initial claims for unemployment benefits, are not consistent with a slowdown in job creation, he said.
Small businesses showed the largest gains on the month, with employers with fewer than 50 employees adding 93,000 workers. Meanwhile, medium-sized businesses with between 50 and 499 workers expanded their payrolls by 39,000 and large companies adding just 24,000.
Among industries, manufacturers cut payrolls by 13,000, while professional services firms added just 27,000, the fewest since October. The financial services industry added just 4,000 new positions, the weakest growth their since January 2014.
The ADP figures come ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.
Economists polled by Reuters are looking for U.S. private payroll employment to have grown by 193,000 jobs in April, down from 195,000 the month before. Total non-farm employment is expected to be 202,000.
The unemployment rate is forecast to stay steady at the five per cent recorded a month earlier.