Private sector adds only 13,000 jobs in June, ADP says

In another sign of tepid growth, U.S. private-sector firms created a lackluster 13,000 jobs in June, according to an employment report released Wednesday by payroll company Automatic Data Processing Inc.

Hiring was “disappointingly weak” in June, said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report from data supplied by ADP.

Some economists lowered their estimates for this Friday’s nonfarm payrolls report after the weak ADP numbers, and others said the risks had risen that Friday’s report could be weaker than they are forecasting.

Still, economists surveyed by MarketWatch are forecasting stronger private-sector job growth of 115,000 jobs when the Bureau of Labor Statistics reports its estimates Friday.

The ADP report doesn’t include government workers. In June, about 240,000 temporary workers at the U.S. Census Bureau lost their jobs, and thousands of state and local government workers may have been laid off. As a result, overall nonfarm payrolls are expected to fall by 130,000 in June, according to MarketWatch’s survey of top economists.

Given the wide swings in temporary employment over the last two months, most economists have been focusing their attention on the trend in private-sector jobs, not total employment.

After the ADP report, economists at Bank of America’s Merrill Lynch lowered their private payroll forecast to 125,000 from 150,000. Economists at Credit Suisse are now forecasting a gain of 75,000 in private jobs, down from 115,000.

After dropping 8.28 million during the recession, private-sector employment has increased five months in a row, averaging a “lethargic” 34,000, Prakken said. The 13,000 gain in June was the weakest since February, when 3,000 private jobs were added.

The ADP report has been significantly weaker than the official Bureau of Labor Statistics survey of business establishments, which have reported an average monthly increase of 99,000 jobs in private-sector payrolls so far this year. The government’s separate survey of households has been even stronger, with private employment up by nearly 300,000 per month this year.

In the ADP report, private-sector job growth was revised higher in May to 57,000 from 55,000, ADP said.

Economists surveyed by MarketWatch had been expecting the ADP report to show a 65,000 increase.

Employment in the goods-producing sectors fell by 17,000 in June, ADP said. Manufacturing jobs increased by 16,000, the fifth straight gain.

Employment in services rose by 30,000.

ADP provides payroll and human-resources services to about one in six U.S. workers, serving more than 500 companies.

Nutting writes for MarketWatch.com/McClatchy.