ADP Automatic Data Processing Inc

Hiring by the private sector cooled in April, a sign that concerns over the global economy may have impacted payroll growth at many American businesses.

Private payrolls across the U.S. rose by 156,000 last month, said payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics. Economists surveyed by The Wall Street Journal expected an increase of 196,000.

The lower-than-expected reading came as March's increase was revised lower by 6,000 to 194,000.

"The job market appears to have stumbled in April," said Mark Zandi, chief economist of Moody's Analytics, noting weakness across most sectors. "The financial market turmoil earlier in the year may have done some damage to business hiring," he said.

While the service sector, home to most of the nation's workers, continued to drive payrolls higher in April, service providers reined in hiring from March. Firms across the sector added 166,000 workers, down from 189,000 a month earlier. Manufacturers, meanwhile, shed 13,000 jobs after cutting 3,000 a month earlier. While recent reports have suggested the beleaguered factory sector has turned the corner, employers in the sector are waiting for evidence of a lasting improvement before adding payrolls.

Small businesses, which account for about two-thirds of American jobs, grew payrolls by 93,000 during the month, steady from March. But hiring by bigger firms decelerated, with medium-size companies adding 39,000 workers, down from 66,000 in March, and big businesses adding 24,000, about a third lower than in the previous month. Smaller businesses are less vulnerable global factors, including the strong U.S. dollar that hurts exports and low commodity prices.

An early Easter may have affected the report. While the holiday this year came well after the survey date for the government's employment report, the ADP report is different because its model incorporates other economic data that may have been affected, such as business sales and industrial production, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Some other job-market indicators, such as initial claims for jobless benefits, have continued to paint a picture of a robust labor market, though many Americans are still waiting a breakout in wages. Economists are similarly awaiting a wage pickup to spark stronger economic growth.

The ADP report comes ahead of the Bureau of Labor Statistics's March employment-situation report, due out Friday morning. ADP lags behind the government's initial private payroll estimate by a month, and it doesn't aim to replicate the government's nonfarm payrolls survey.

Economists polled by The Wall Street Journal expect the BLS to report an increase of 200,000 nonfarm payrolls, down modestly from 215,000 in March and alongside an unemployment rate that holds steady at 5.0%. David Ader, fixed income strategist at CRT Capital, notes that ADP has been undershooting private nonfarm payrolls by an average of 28,000 over the past six months.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

May 04, 2016 09:15 ET (13:15 GMT)

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