"Small Non-Farm" Surprises! U.S. April ADP Employment Growth Far Below Expectations, Lowest Increase Since Last July

According to the Zhitong Finance APP, the U.S. April "small non-farm" data was far below expectations. The hiring pace of U.S. companies in April slowed to the lowest level in nine months, indicating a weakening demand for workers amid economic uncertainty. Data from ADP Research Company shows that the number of private sector jobs in the U.S. increased by 62,000 in April, the smallest increase since July 2024, significantly lower than the expected 115,000. Employment numbers in the education and health services, information, and professional and business services sectors all saw direct declines.

ADP Chief Economist Nela Richardson stated in a statement on Wednesday, "Unease is the keyword today. Employers are trying to reconcile policy and consumer uncertainty with a range of fundamentally positive economic data. In such an environment, it is difficult to make hiring decisions."

Tariffs imposed by Trump on U.S. trading partners have led some companies to halt spending plans and may result in weakened labor demand in the coming months. An increasing number of companies are announcing layoffs, including federal contractors whose contracts have been canceled by the government efficiency department.

A monthly survey by the University of Michigan shows that consumers remain concerned about rising unemployment rates and slowing income growth next year. Moreover, Federal Reserve Chairman Jerome Powell emphasized the necessity for the Fed to ensure that tariffs do not lead to sustained inflation, warning that the Fed may have to choose between curbing price pressures and supporting the labor market.

The report released by ADP in collaboration with the Stanford Digital Economy Lab shows mixed data on wage growth. In April, employee wages increased by 4.5% year-on-year, slightly slowing from March. The wage growth for job switchers accelerated year-on-year from 6.7% in March to 6.9% in April.

Another data released by the U.S. Bureau of Labor Statistics on Wednesday showed that the employment cost index, including wages and benefits, rose by 0.9% in the first three months of this year, in line with market expectations. Compared to a year ago, the index increased by 3.6%, the lowest increase since 2021.

On Tuesday, the JOLTS job openings in the U.S. fell from a revised 7.48 million in February to 7.19 million last month, the lowest level since September of last year. This figure is close to the levels seen in 2020 and is below the estimates of all economists surveyed by Bloomberg. Combined with the ADP employment data, this seems to indicate that demand for labor is weakening as employers are postponing spending plans until they have a clearer understanding of Trump's policies. This could be bad news for the non-farm payroll report to be released on Friday, which has a median forecast indicating that job growth will significantly slow while the unemployment rate remains stable.

Another economic data released on Wednesday also painted a bleak economic outlook. The U.S. economy contracted in the first quarter, with businesses stockpiling imported goods to avoid rising costs being a major drag, highlighting the destructive impact of Trump's chaotic tariff policies. Preliminary data from the U.S. Department of Commerce shows that the annualized quarterly real GDP in the first quarter contracted by 0.3%. The risk of a U.S. recession has surged. The financial trading and forecasting platform Kalshi currently predicts a 74% probability of a recession in the U.S. this year