Economic Snapshot: Private sector employment adds 201,000 jobs in May

The past few months of ADP employment numbers have been incredibly low compared to the previous year, but in May they jumped back above 200,000. Growth continues in the manufacturing and non-manufacturing sectors, albeit at a slower rate in non-manufacturing. 

ADP employment report

U.S. nonfarm private sector employment added 201,000 jobs in May, a huge increase from 165,000 jobs in April.

Employment in small businesses contributed heavily to the increase. Small businesses added 122,000 jobs in May, up from 94,000 in April. Medium-sized businesses added 65,000 jobs, down from 70,000 last month, and large businesses added 13,000 jobs, up from 5,000 in April.

The service-providing sector had a strong month in May, adding 192,000 jobs, a sharp increase from 164,000 in April. Trade, transportation and utilities added 56,000 jobs, up from April’s 41,000 jobs, and new jobs in financial activities doubled from April’s numbers, adding 12,000 in May. Professional/business services added 28,000 jobs this month, down from 35,000 in April.

The goods-producing sector added 9,000 jobs in May, significantly higher than 1,000 in April. Construction added 27,000 jobs, up from 24,000 the previous month, while manufacturing lost 5,000 jobs, which is still an improvement from the 8,000 jobs lost last month.

ISM manufacturing index

The ISM manufacturing index increased 1.3 percentage points to 52.8 in May. Economic activity in the manufacturing sector expanded for the 29th consecutive month and the overall economy grew for the 72nd consecutive month.

The New Orders Index registered at 55.8 percent, an increase of 2.3 percentage points from April, and the Production Index registered at 54.5 percent, 1.5 percentage points below April.

The Employment Index registered at 51.7 percent, 3.4 percentage points above April and reflecting growing employment levels.

Inventories of raw materials registered at 51.5 percent, an increase of 2.0 percentage points from April. The Prices Index registered at 49.5 percent, jumping 9.0 percentage points from April’s reading. This indicates lower raw materials prices for the seventh consecutive month.

Fourteen of the 18 manufacturing industries reported growth. Only two industries reported contraction: Textile Mills and Computer & Electronic Products.

ISM non-manufacturing index

The ISM non-manufacturing index registered 55.7 percent in May, 2.1 percentage points lower than the April reading of 57.8 percent. The represents continued growth in the non-manufacturing sector, although at a slower rate. Economic activity in the non-manufacturing sector grew for the 64th consecutive month in May.

The Business Activity Index decreased 2.1 percentage points to 59.5. This reflects growth for the 70th consecutive month at a slower rate. The New Orders Index registered 57.9 percent, 1.3 percentage points lower than the April reading of 61.6 percent.

The Employment Index declined 1.4 percentage points to 55.3 in May, but the reading still indicates growth for the 15th consecutive month. The Prices Index rose 5.8 percentage points to 55.9, which indicates prices increased in May for the third consecutive month.

Fifteen of the 18 non-manufacturing industries reported growth in May, with Arts, Entertainment & Recreation taking the lead. Mining was the only industry to report contraction.

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