US private hiring surges, adding 978,000 positions in May — ADP

WASHINGTON — US private hiring surged in May, adding 978,000 positions, according to payroll services firm ADP, far more than expected.

Most of the new jobs were in the services sector, which increased by 850,000 positions, more than half of which were in leisure and hospitality, the sector hardest hit by the Covid-19 shutdowns.

Goods-producing firms added 128,000 jobs, the report said.

While the overall gain, the biggest since June of last year, bodes well for the government jobs report due out Friday, economists warn that ADP figures often are widely different than official data.

Despite the Labour Department reporting a tepid increase of 218,000 private nonfarm jobs in April, ADP's revised data shows a gain of 654,000.

Still, ADP chief economist Nela Richardson said the results underscore the "marked improvement" in private payrolls.

"Companies of all sizes experienced an uptick in job growth, reflecting the improving nature" of the pandemic and economy, she said in a statement.

Ian Shepherdson of Pantheon Macroeconomics notes the ADP model includes other economic data that have strengthened as the economy has reopened.

"But firms appear not to be able to find all the workers implied by the strong macro data," he said in an analysis, "so we think ADP likely will overstate the official numbers for the second straight month."

Firms nationwide have reported struggles to fill open positions, and a Federal Reserve report released Wednesday noted that the issues have hindered production in some cases and prompted companies to boost wages and incentives.

The consensus forecast among economists is for a private jobs gain of 650,000 in the Labour Department report.