« Yahoo Offers Competitive Maternity Perks | Main | Apple's Upcoming iOS 7 May Have New Look »

Jobs Report: Summer Chill for Economy?

iStockphoto/Thinkstock(NEW YORK) -- Is a spring and summer chill ahead for the U.S. economy?

After this week’s upbeat reports on surging home prices and reasonably solid consumer spending, ADP, the payroll firm, released gloomy numbers on job creation just two days before the Labor Department’s April employment survey.

According to ADP, private employers added just 119,000 new jobs in April, “which is a meaningful weakening in job creation,” says economist Mark Zandi of Moody’s Analytics. The number of new jobs was the fewest in seven months.

“I think the key reason for the slowdown is the fiscal headwinds, that's the tax increases, the expiration of the payroll tax holiday, for example, and the spending cuts, the government spending cuts and sequester,” says Zandi. He predicts that the sequester will take a bigger bite out of the economy in the months ahead. “Right now the Defense Department has been very aggressive in cutting. Big declines in defense outlays and so that’s starting to ripple through the economy.”

The people who do the buying for American businesses say factory orders rose at a slower pace last month as manufacturers cut back on hiring and their stockpiles. The index from the Institute for Supply Management was down.

Spending on construction projects fell in March as the biggest drop in government projects in more than a decade overwhelmed strength in home building. The report is from the Commerce Department.

On the plus side, Ford, GM, Chrysler and Nissan are all reporting double-digit U.S. sales increases last month, signaling the best April for car and truck sales in six years. The only laggard was Volkswagen, with a sales decline of 10 percent. The gains are another sign that Americans continue to buy cars and trucks despite high unemployment and mixed economic signals.

Copyright 2013 ABC News Radio

ABC News Radio