Private Hiring Slows Sharply in April as Employers Grapple with Uncertainty

The ADP Employment Change report for April showed a significant slowdown in private-sector job creation, with 62,000 jobs added, well below expectations for a 115,000 gain and down sharply from March’s upwardly revised 208,000 increase. The data highlights growing employer caution amid persistent macroeconomic and policy uncertainty, marking the weakest print since January and raising red flags ahead of Friday’s Nonfarm Payrolls report.

Sector Breakdown: Hiring Mixed with Services Faltering

The report revealed a clear bifurcation in hiring trends:

• Goods-producing sectors added 26,000 jobs, led by construction (+16,000) and natural resources/mining (+6,000), signaling resilience in industrial activity despite rising input costs.
• However, service-providing sectors added just 34,000 jobs, as key categories like education and health services (-23,000), information (-8,000), and professional/business services (-2,000) shed workers. Notably, leisure and hospitality (+27,000) remained a bright spot, reflecting steady demand in consumer-facing areas.

Pay Insights: Wage Growth Stays Solid but Uneven

Pay trends remained relatively steady, with job-stayers seeing annual wage growth of 4.5%, a slight deceleration from March’s 4.6%. Job-changers experienced stronger momentum, with pay gains accelerating to 6.9% YoY, up from 6.7% the prior month—suggesting competition for talent remains concentrated in certain pockets.

• Construction, healthcare, and hospitality continued to show stronger wage growth (all +4.7%).
• Small firms (1-19 employees) saw the weakest pay growth at just 2.8%, highlighting margin pressure and limited pricing power at the lower end of the business spectrum.

ADP Commentary: “Unease” Rules the Hiring Environment

ADP Chief Economist Nela Richardson captured the mood succinctly:

“Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment.”

This reinforces the idea that businesses, while operationally stable, are delaying hiring decisions until greater clarity emerges around tariffs, rates, and fiscal policy.

Labor Market Momentum: A Shift from Resilience to Hesitation

Compared to recent months of steady upside surprises in private hiring, April’s print marks a clear cooling in labor momentum. The decline was broad-based, cutting across establishment size and region, and notably included job losses in sectors previously viewed as resilient. The goods sector held up, but the retreat in education/health and business services suggests high-wage employment may be under more pressure than previously understood.

Fed Implications: Caution Over Cut Timing Increases

The weaker-than-expected report is likely to amplify dovish voices within the Federal Reserve, especially with wage growth appearing to moderate. Markets continue to price in approximately 50bps of rate cuts for 2025, and this report could reinforce expectations for a cut as early as September, particularly if Friday’s NFP confirms labor softening. Still, with job-changer wage inflation ticking up, the Fed may tread carefully before easing prematurely.