“Little Fei Farmer” is upset! The increase in ADP employment in the US in April fell far short of expectations and hit the lowest increase since July last year

The Zhitong Finance App learned that America's “small non-farmers” in April fell far short of expectations. US corporate recruitment slowed to its lowest level in nine months in April, indicating that demand for workers is weakening against the backdrop of economic uncertainty. According to data from ADP Research, the number of people employed in the US private sector increased by 62,000 in April, the smallest increase since July 2024, which is far below the expected 115,000. The number of employees in education and health services, information, and professional and business services all experienced direct declines.

ADP chief economist Nela Richardson said in a statement on Wednesday: “Unease is the key word today. Employers are trying to reconcile policies and consumer uncertainty with a range of fundamentally positive economic data. It's difficult to make hiring decisions in such an environment.”

Trump's tariffs on US trading partners have caused some companies to stop spending plans, and may weaken labor demand in the coming months. A growing number of companies are announcing layoffs, including federal contractors, whose contracts have been cancelled by the government's Department of Efficiency.

Consumers are still worried about rising unemployment and slowing income growth next year, according to a monthly survey by the University of Michigan. Moreover, Federal Reserve Chairman Powell stressed that it is necessary for the Federal Reserve to ensure that tariffs do not cause inflation to continue to rise. He warned that the Federal Reserve may have to choose between containing price pressure and supporting the labor market.

The report, published by ADP in collaboration with the Stanford Digital Economy Lab, shows mixed wage growth data. Salaries of employees in April increased by 4.5% compared to the same period last year, slightly slowing down from March. The year-on-year increase in job-hopping wages accelerated, rising from 6.7% in March to 6.9% in April.

Another data released by the US Bureau of Labor Statistics on Wednesday showed that the employment cost index, including wages and benefits, rose 0.9% in the first three months of this year, in line with general market expectations. Compared to a year ago, the index is up 3.6%, the lowest increase since 2021.

On Tuesday, the number of JOLTS job vacancies in the US last month fell from 7.48 million after being revised in February to 7.19 million, the lowest level since September last year. This figure is close to 2020 levels and is below the estimates of all economists surveyed by Bloomberg. Combined with ADP employment data, this appears to indicate that demand for labor is weakening as employers have shelved spending plans before they have a clearer understanding of Trump's policies. This may be bad news for the non-farm payrolls report to be released on Friday. The median forecast for the report shows that employment growth will slow significantly, while the unemployment rate will remain stable.

Another economic data released on Wednesday also paints a bleak picture of the economic outlook. The US economy contracted in the first quarter, and companies hoarded large amounts of imported goods to avoid rising costs as a major drag, highlighting the destructive impact of Trump's chaotic tariff policy. According to preliminary data released by the US Department of Commerce, the initial annualized quarterly rate of US real GDP contracted by 0.3% in the first quarter. The risk of a recession in the US has surged. The US financial trading and forecasting market platform Kalshi currently anticipates a 74% chance of a US recession this year.