Businesses added xx jobs in June, payroll processor ADP said Thursday, in a sign that the government’s employment report could show at least a moderate rebound after two dreary showings.
Economists surveyed by Bloomberg predicted ADP would count 160,000 new jobs. They estimate the Labor Department’s survey of the public and private sectors, due Friday, will reveal 180,000 gains. Labor’s tally in May was suppressed by the strike of 35,000 Verizon workers and it’s expected to be inflated by their return in June. By contrast, the ADP survey is unaffected by the walkout because it counts workers as employed even if they aren’t paid in a given week.
ADP attempts to foreshadow Labor’s private-sector total and it often reflects similar broad trends but it has differed from it by an average of more than 30,000 a month the past two years, according to an analysis by High Frequency Economics. In May, ADP said businesses added 173,000 jobs while Labor’s survey recorded just 25,000 and 38,000 total, including federal, state and local governments.
Other labor market indicators have been mixed. Initial jobless claims, a gauge of layoffs, remain low, and a measure of service-sector activity released Wednesday showed a solid upswing last month. But a Conference Board survey indicated online ads fell sharply in June for a second straight month.
Many economists say job growth likely has slowed from the 200,000-plus pace of recent years because of the low 4.7% unemployment rate, which reflects a smaller supply of available workers that’s thwarting still healthy employer demand. Many analysts believe payroll gains in coming months will likely average 150,000 to 175,000 a month, a pace that’s more than enough to keep pushing down the unemployment rate.
Yet the modest 80,000 average that Labor toted for April and May likely reflects myriad temporary factors, including the Verizon strike and warm winter weather that pulled forward hiring to early in the year, economists say.
The Federal Reserve plans to scrutinize Friday’s report to determine if the recent slump in job growth represents a blip or a sustained slowdown that could lead policymakers to significantly delay their next interest rate hike. The Fed raised its benchmark rate in December for the first time in nine years but has since held it steady.
