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Small companies hiring; larger companies, not so much

By Catholic Online (NEWS CONSORTIUM)
May 2nd, 2012
Catholic Online (www.catholic.org)

Employment in the private sector has slowed. While smaller companies, those with 50 or less employees hired 58,000 people in April, larger companies with 500 or more employees hired only 4,000 new workers. "Those employment gains are not enough to get us back to full employment," said Joel Prakken, chairman of Macroeconomic Advisers. "I don't consider this to be a good number. It's tepid."

LOS ANGELES, CA (Catholic Online) - Overall, businesses added just 119,000 jobs in April, according to a report issued this week by payroll-processing company ADP. The number fell far short of the 170,000 jobs economists had been expecting. The same report earlier this year showed companies added 201,000 jobs in March and 228,000 jobs in February. In contrast, medium-sized businesses added 57,000 to their payrolls for this period.

Among the many factors to blame for the slowdown is the warm winter weather. According to Prakken, the balmy temperatures could be to blame for the sudden slowdown in job growth in the spring.

"There is some evidence that unusually warm weather boosted employment during the winter months, with a 'payback' now coming due," Prakken said.

The construction industry in particular added more jobs than usual early in the year and then cut 5,000 jobs in April. Warmer weather may have simply allowed them to build more in the winter, Prakken said.

Consumers saw their paychecks rise in March, as household income rose by the most in three months. The Commerce Department said this week that consumer income rose 0.4 percent last month, while spending by rose 0.3 percent. Much of the spending increase was the result of higher gasoline prices.

"The spending number is an indication that the higher gas prices we saw last month are taking their toll," said Todd Schoenberger, managing principal at the Black Bay Group in New York.

The ADP report typically sets the tone for the government's highly anticipated monthly jobs report, due at the end of this week.

The unemployment rate is not predicted to fall beyond its current 8.2 percent, unless more workers leave the labor force.

The employment report comes at a crucial moment for the U.S. economy. A strong showing could help ease concerns that the economy is stumbling in the third year of a modest recovery. A weak number will cause concern that what appeared to be a strong pickup in hiring this winter was only temporary.

"The data are choppy right now," said RBC Capital Markets chief U.S. economist Tom Porcelli. "There's no way getting around that."

Overall, the U.S. economy grew at an estimated pace of 2.2 percent in the first three months of the year, the government said, down from the fourth quarter's 3 percent rate.

Forecasters say they are expecting Friday's report to show gains of about 170,000 jobs in April, better than the disappointing 120,000 added in March.

© 2012, Distributed by NEWS CONSORTIUM.

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