Private-sector employers added 253K jobs in May

U.S. businesses added a robust 253,000 jobs in May as employers face an increasingly tightening labor market, which is expected to create a shortage of workers.

Medium-sized firms with fewer than 500 employees made up the bulk of the hiring last month, adding 113,000 workers, according to the latest report released on Thursday by payroll processor ADP.

The professional and business services sectors, which added 88,000 jobs, posted their largest monthly gains since 2014.

ADP’s April total of jobs was revised down slightly to 174,000 from 177,000.

{mosads}”Job growth is rip-roaring,” said Mark Zandi, chief economist of Moody’s Analytics, which oversees the monthly report.

Jobs growth has averaged nearly 240,000 jobs through the first five months of the year.

“May proved to be a very strong month for job growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

The latest figures point to continued drops in the jobless rate, which Zandi says reflects full employment.

Hiring is easily outpacing the 88,000 jobs needed to lower the unemployment rate. 

“The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force,” Zandi said.

A worker shortage is expected to spur businesses to raise salaries at a faster pace.

Last month, Zandi said the 4.4 percent unemployment rate represents the long road back to full employment, which will eventually make it more difficult for businesses to find qualified employees.

“Increasingly, businesses’ No. 1 challenge will be a shortage of labor,” Zandi said.

On Friday, the government is set to release May figures with a forecast of about 185,000 jobs, well below ADP’s figure. 

Construction added 37,000 jobs and manufacturing hired 8,000 workers, while leisure and hospitality shed 11,000 jobs last month.