ADP Private Payrolls Rise a More-than-Expected 172,000 in June -- Update
July 07 2016 - 9:31AM
Dow Jones News
By Lisa Beilfuss
Private payrolls in June rose at the best clip in three months,
suggesting U.S. firms continue to create jobs at a healthy pace and
alleviating some concerns over May's marked slowdown.
Private firms across the U.S. increased 172,000 workers to their
ranks last month, according to payroll processor Automatic Data
Processing Inc. and forecasting firm Moody's Analytics. Economists
surveyed by The Wall Street Journal expected an increase of
151,000.
May's gain, initially reported at 173,000, was revised down
slightly to 168,000.
"Job growth revived last month from its spring slump," said Mark
Zandi, chief economist of Moody's Analytics. The employment market
remains healthy outside of the struggling energy and manufacturing
sectors, "and Brexit won't help," but small- and midsize companies
are hiring at a solid pace, he said.
U.S. job growth has slowed in recent months, with the
government's May employment report showing considerably weaker
growth in payrolls than had been expected and previous months'
gains revised down, the Federal Reserve said in its June meeting
minutes released Wednesday. While a strike at Verizon
Communications Inc. dragged down May's payroll figure, weakness was
broad-based with construction companies, manufacturers and miners
together cutting 36,000 jobs, temporary head counts dropping by
21,000 and service providers significantly slowing hiring.
ADP's May report didn't similarly reflect significantly softer
hiring, partly because of its methodology. The report is based on
data collected from ADP clients in addition to lagged government
figures -- it doesn't aim to replicate the nonfarm payrolls survey
-- and it didn't include the Verizon strike or adjust for it.
Some other job market indicators, such as the number of
Americans filing for unemployment benefits and those quitting their
jobs, have continued to suggest a healthy labor market. Separately
Thursday morning, the Labor Department said jobless claims dropped
last week.
Service providers and small businesses continued to drive the
June payroll gains, according to ADP. Firms with fewer than 50
employees added 95,000 workers, up from 84,000 in May and far
outpacing payroll gains at bigger businesses that continue to
grapple with weaker international demand, uncertainty over the
Brexit fallout and a strong U.S. dollar that hurts exports.
Service-sector firms, home to most U.S. jobs, grew payrolls by
208,000 last month, up 35,000 from May. The increase offset an
intensified slump in the construction and manufacturing sectors,
were head counts fell by 26,000.
The June ADP report comes a day before the Bureau of Labor
Statistic's employment situation report. Economists polled by The
Wall Street Journal expect nonfarm payrolls to have risen 165,000
last month, up from 38,000 in May. The unemployment rate is
expected to tick up to 4.8% from 4.7%, where it unexpectedly fell
because of sharp labor market shrinkage.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
July 07, 2016 09:16 ET (13:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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