Job Gains Slow in July

Companies in the U.S. added 99,000 jobs in July, the fewest this year, a private report based on payroll data showed Wednesday.

The gain followed a 368,000 jump in June, according to an ADP National Employment Report based on a sampling of 225,000 businesses with about 14 million workers on payrolls. Automatic Data Processing Inc. said there was a 90% correlation between its data and the Labor Department’s monthly private jobs figures.

The economy probably added 145,000 jobs last month, according to the median forecast of economists in a Bloomberg News survey before the government releases its report Friday. Smaller gains in hiring may further slow spending by consumers, already buffeted by a cooling housing market and higher fuel costs.

“Growth has been restrained by energy prices and higher interest rates, and so hiring isn’t so vigorous right now,” said David Sloan, senior economist at 4Cast.com in New York.

The ADP data and the Labor Department’s monthly payrolls statistics don’t always correlate closely. The jobs ADP said were added in June compared with the 90,000 that the department reported. Including government employment, the economy added 121,000 workers in June.

In February, the ADP said private employment rose 342,000 and the government’s statistics showed a 168,000 increase. Employment gains at private employers have averaged 200,000 this year, ADP said.

“These findings indicate a deceleration of employment in July,” said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report jointly with ADP.

Even with the hiring slowdown, the labor market probably remained tight enough last month to keep the Federal Reserve on guard against inflation. The government’s employment report this week will probably show that average hourly earnings rose 0.3% after a 0.5% gain in June, according to the Bloomberg survey median. The unemployment rate probably held at a five-year low of 4.6% for a third month.

Fed policymakers raised their benchmark overnight bank lending rate by a quarter point for the 17th straight time in June, to 5.25%. They will decide whether to raise rates again when they meet Tuesday.

Job cuts announced by U.S. employers fell 64% in the 12 months that ended in July, to their lowest in six years, Challenger, Gray & Christmas Inc., a Chicago-based placement firm, said Tuesday.

The ADP report, which is released monthly, two days before the government’s payroll statistics, shows changes in private business payrolls and excludes federal government hiring.