The US private sector added 135,000 jobs in May, payrolls firm ADP said Wednesday, pointing to slowing jobs growth under the pressure of tax increases and government spending cuts.
The majority of the gains were in service industries, which added a total of 138,000 jobs, offsetting the loss of 3,000 jobs in the goods-producing sector.
A gain of 5,000 jobs in construction amid a recovering housing market was wiped out by a loss of 6,000 jobs in manufacturing.
ADP revised downward April’s job gains to 113,000, from an initial estimate of 119,000.
Mark Zandi, chief economist of Moody’s Analytics, which helps produce the report, highlighted that job growth had slowed since the beginning of the year across all industries and all but the largest companies.
“The softer job market this spring is largely due to significant fiscal drag from tax increases and government spending cuts,” Zandi said.
Amid political gridlock over public deficit reduction, payroll tax cuts expired on January 1 and the drastic “sequester” spending cuts to slash $85 billion through September began on March 1.
The weak ADP report surprised many analysts, who had forecast 157,000 jobs were added last month.
It came before the Labor Department’s jobs data for May set for release Friday.
Analysts estimate the United States added 159,000 jobs last month, down from 165,000 in April. The unemployment rate was expected to stay at 7.5 percent, unchanged from the prior month.
US private sector adds 135,000 jobs in May: ADP
