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A 1st quarter growth shutout

By Mark Hamrick ·
Wednesday, April 30, 2014
Posted: 1 pm ET

scoreboardIf the economy were competing in something akin to sports playoffs, it nearly got shut out in the first growth contest of the year.

First-quarter economic growth was about as close to zero as it gets. The Commerce Department estimates the nation's gross domestic product expanded at an annual rate of 0.1 percent, well short of the consensus among economists who expected 1 percent growth.

A rebound is expected during the current quarter in light of some of the positive signs seen over the past couple of months.

"Some of the more notable indicators include retail sales, motor vehicle sales, capital equipment orders, manufacturing output, labor hours worked and payroll employment," says Paul Edelstein, the director of financial economics at IHS Global Insight. "The notable exception is housing, which appears to be suffering from general supply and demand problems."

He expects second-quarter GDP growth to top 2.5 percent.

Scoring in employment

The job market is showing even further signs of improvement.

We'll get a better idea about last month's hiring when the Labor Department releases the April employment report on Friday. But ahead of that, payroll processing giant ADP is reporting that private employers added 220,000 jobs during the month.

"After a tough winter, employers are expanding payrolls across nearly all industries and companies," says Mark Zandi, chief economist with Moody's Analytics.

Sectors adding jobs, according to ADP:

  • Professional and business services: 77,000.
  • Trade/transportation/utilities: 34,000.
  • Construction: 19,000.
  • Financial activities: 8,000.

Friday's big game

The ADP report was the strongest since November of last year. Stuart Hoffman, the chief economist for PNC, says it supports his view that Friday's report will show around 200,000 jobs were added in April. That's slightly better than the month before.

Hoffman expects the unemployment rate to slip to 6.6 percent, from 6.7 percent in March. He also looks for another positive sign: evidence of an April rebound in labor-force participation, as more encouraged Americans decided to look for work -- or, got back in the game.

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