US firms are hiring again

THE painful process of cutting jobs has run its course and private sector firms in the US are hiring staff once again, according to the ADP employer services survey yesterday, raising hopes that tomorrow’s key non-farm payrolls data will show a substantial boost to US employment.

The ADP survey showed that US businesses added 32,000 jobs in April and also had upward revisions that revealed modest increases in February and March. This was the first time that the number of private sector jobs has risen since January 2008.

Ian Shepherdson, chief US economist at High Frequency Economics, said: “This continues the gradually improving trend. It is hardly booming, though; we reckon this is consistent with private payrolls rising about 100,000 in the official report.” He anticipates a headline figure of around 250,000 on Friday, boosted by census hiring.

But while the labour market recovery is gaining momentum, analysts are worried about the sustainability of the US economic rebound after the ISM non-manufacturing index failed to pick up in April.

The composite index was left unchanged at 55.4 as the gains in business activity and suppliers deliveries exactly offset falls in the new orders and employment.

Paul Dales, USā€ˆeconomist at Capital Economics, said: “The recovery in activity in the non-manufacturing sector is clearly lagging behind that in industry. This is largely because non-manufacturers are not benefiting from the rapid turnaround in world trade.”

The ISM manufacturing climbed to 60.4 last month.