Private, nonfarm payrolls added 133,000 jobs in May according to payroll processing firm ADP, coming in below consensus expectations of around 150,000, and signaling that Friday's jobs report could be underwhelming.
ADP's numbers come after two straight disappointing jobs reports. According to the Labor Department, the economy added only 154,000 jobs in March and 115,000 in April, after adding more than 200,000 jobs per month in the three prior months.
"Today's number ... suggests to me that unless there is another further decline in the labor force participation rate reported on Friday, it's very unlikely that the national unemployment rate will tick down. It could be stable, it could even rise," said Joel Prakken, chairman of economic consulting firm Macroeconomic Advisers on a call with reporters this morning.
Among the soft spots in ADP's May jobs report were manufacturing, which lost 2,000 jobs in May, and construction, which lost 1,000 jobs. Both saw their second straight monthly declines.
Though employers may simply be pulling back on hiring after a balmy winter, particularly in construction, that may not be enough to explain recent sluggish job growth, says Prakken.
"There is some possibility that both the number last month and the number this month include some modest payback on employment following several months of very warm weather during the winter of 2011 and 2012," he said. "However, even allowing for that, I think it's pretty clear that today's number both confirms and reinforces the deceleration of employment that we saw last month"—a deceleration that Prakken considers "hardly surprising" given other mediocre economic readings in recent months.
One of those was a tepid GDP growth rate, initially pegged at 2.2 percent for the first quarter. Today that number went from tepid to chilly, as the Commerce Department revised it down to 1.9 percent.
Government spending was a key contributor to slow growth in the first quarter, and there is still plenty of room for Washington to be an economic drag, writes James Marple, senior economist at TD Economics, in a commentary on this morning's numbers.
"The decline in government spending is also a reminder of the impact of austerity on this side of the Atlantic," he says. "A steep fiscal cliff still hangs over growth in 2013, but so too does another potentially raucous debate over the U.S. debt ceiling before this year is out. Neither of these is positive for confidence, hiring or investment."
In addition, as Prakken noted this morning, an ever-uncertain eurozone also looms as a threat to the U.S. economy. A crisis there could both cause turmoil in the financial sector and decrease demand for U.S. goods.
New jobless claims have also stagnated after showing promising declines earlier this year. Today the Labor Department reported that last week 383,000 people filed new jobless claims—an increase of 10,000 over the prior week. The more stable four-week moving average also showed a bump of 3,750. Since hanging close to 360,000 through most of March, that initial jobless claims number has inched back upward.
Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at firstname.lastname@example.org.