Private-sector job growth beats expectations in June, signaling a labor market rebound
Businesses added 172,000 net new jobs last month, payroll firm Automatic Data Processing said Thursday, stronger than expected growth that signals a labor market rebound after a surprisingly anemic May.
The figure was better than the 150,000 job gains economists had forecast and a slight improvement over May’s downwardly revised 168,000.
“Job growth revived last month from its spring slump,” said Mark Zandi, chief economist at Moody’s Analytics, which assists ADP in preparing the report.
The data were consistent with analyst expectations that Friday’s Labor Department report will show that job growth bounced back strongly last month after a surprisingly anemic 38,000 net new positions were added in May.
Economists forecast that private- and public-sector hiring increased to 180,000 net new jobs last month, while the unemployment rate is expected to tick up to 4.8%.
Part of the reason for May’s poor job growth -- the worst in five years – was a strike by 35,000 Verizon workers.
Those workers did not count on employers’ May payrolls, but the strike ended in late May and they will be counted on June payrolls.
Still, ADP’s figures don’t always line up with the Labor Department’s. May was a prime example, as ADP’s initial figure of 173,000 net new jobs was much higher than the government reported.
In June, ADP said service-producing industries led to stronger private-sector job growth. They added 208,000 net new jobs, up from 173,000 the previous month.
But goods-producing industries saw a sharp decline last month, shedding 36,000 net jobs after a decline of 5,000 in May.
Manufacturing payrolls declined by 21,000 in June, much worse than the decline of 3,000 the previous month. Construction companies shed 5,000 jobs after adding 9,000 in May.
The sharp slowdown in job growth in May was a key reason why Federal Reserve policymakers held a key interest rate steady at their meeting last month.
“Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market,” according to minutes from the meeting, released Wednesday,
“Even so, many remarked that they were reluctant to change their outlook materially based on one economic data release,” the minutes said.
Fed officials noted that other indicators have shown the labor market remained healthy.
One of those indicators has been initial claims for unemployment benefits.
On Thursday, the Labor Department said claims for the week that ended Saturday dropped by 16,000 to 254,000. That was near a 40-year low.
Stronger job growth would be welcomed by Fed officials, but continued concern about the effects of the British vote to leave the European Union is expected to keep the central bank from raising its benchmark short-term interest rate for months.
Follow @JimPuzzanghera on Twitter
ALSO
Why investment in space companies is heating up
Tesla and Google are both driving toward autonomous vehicles. Which is taking the better route?
Beverly Hills billionaire to take over Twinkies maker Hostess Brands
