Private payrolls rose by 109,000 in April, topping expectations, ADP says

Private sector job creation was stronger than expected in April, providing more evidence of a stable labor market and less incentive for the Federal Reserve to lower interest rates amid persistently higher inflation, ADP reported Wednesday.

The payrolls processing firm said companies added 109,000 jobs for the month, a step up from the 61,000 created in March and better than the Dow Jones consensus estimate for 84,000. The March total was revised down by 1,000.

Wages for those staying in their jobs rose 4.4% annually, down 0.1 percentage point.

As has been the case, job creation was concentrated in a few key categories, an indication that while hiring overall is solid, the benefits are not being spread out over sectors.

Education and health services again dominated, adding 61,000 new hires. Trade, transportation and utilities saw a gain of 25,000. Construction, another consistent leader in recent months, rose by 10,000, while financial activities contributed 9,000.

The Trump administration's tariff efforts to reshore jobs through tariffs also showed only modest gains, with the sector adding 2,000. Leisure and hospitality and information services each saw growth of 4,000. Professional and business services reported a loss of 8,000.

From a size standpoint, companies with fewer than 50 employees added 65,000 while those with 500 or more workers added 42,000.

“Small and large employers are hiring, but we're seeing softness in the middle,” said Dr. Nela Richardson,

ADP's chief economist. “Large companies have resources to deploy, and small ones are the most nimble, both important advantages in a complex labor environment.”

Though the headline number was better than expected, it's broadly consistent with what Fed policymakers and economists have described as a low-hire, low-fire environment — where companies are reluctant to lay off workers but also have pared back hiring significantly.

Current conditions, with the labor market defying fears of a deeper trough and inflation staying high due primarily to impact from tariffs and the Iran war, have kept the Fed in a holding pattern on interest rates.

The rate-setting Federal Open Market Committee last week voted again to keep its key interest rate unchanged. However, the vote saw an unusually high four dissents, including three from officials who thought the committee should have removed language from its post-meeting statement that indicated the Fed's next move would be a rate cut.

Markets now will turn their attention to Friday's nonfarm payrolls report from the Bureau of Labor Statistics. The Wall Street consensus is for job growth of 55,000 and the unemployment rate to hold steady at 4.3%.

The BLS report differs from ADP in that it includes government jobs. Also, ADP's data set is more skewed toward smaller and medium-sized businesses.