Private Sector Lagging More Than Expected; U.S. Trade Deficit Grows
Private companies in the U.S. hired far less workers than expected in April and the country's trade deficit widened the most in two years in that same month.
The trade deficit numbers show that the economy's growth is being delayed this quarter.
Although fewer workers were hired at private companies, data is showing payrolls are growing strongly and the demand for imports is surging.
Data from the ADP National Employment Report showed private employers added 179,000 jobs in May. That's compared to the 215,000 jobs added in April, and far below analysts May estimates of 210,000 jobs.
The ADP report is ahead of the government's non-farm payroll report that will be released Friday. The government's report is far more comprehensive.
Another report shows the trade gap increased 6.9 percent to $47.2 billion due to imports hitting a record high. This is the largest deficit since April 2012.
Adjusted for inflation, the deficit increased to $53.8 billion, up from $50.9 bilion in March.
These reports sent stocks mostly flat Wednesday. The Dow Jones Index is down slightly during late morning trading, down 5.23, or 0.03 percent. The S&P 500 is up 1.74, or 0.09 percent.
The poor trade numbers led to a decline of almost one percentage point in the first quarter gross domestic product (GDP).
Good signs of economic growth came from the record number of imports into the U.S. Imports of automobiles, food, capital goods and consumer goods were all at record highs in April.
More capital goods for businesses could mean businesses are trying to accumulate their inventories and that could boost growth.
Trade with the European Union and Germany suffered. The deficit with the EU and Germany was the largest on record.
The U.S. continues to import large numbers of goods from South Korea and China. South Korean imports hit a record high and Chinese imports rose 16.3 percent.
The U.S. is exported less according to recent reports. Exports fell by 0.2 percent.
Finally, productivity numbers are slipping according to the Labor Department. Non-farm productivity fell the most in six years, partially due to a harsh winter in the first quarter. Workers logged more hours but productivity fell and that increased labor costs.