Private payrolls rise by 157,000 in June: ADP

Private payrolls rise by 157,000 in June: ADP

57 By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — Private-sector employment rose 157,000 in June, according to Automatic Data Processing Inc.’s employment report released Thursday, in what could be a signal that the recent economic soft patch may not last long.

The headline number surprised Wall Street, coming in more than double the 70,000 increase expected by economists.


With the report typically considered the first stab at counting job gains each month, markets will be watching the ADP data closely because last month’s report accurately predicted the sharp drop in nonfarm payroll subsequently reported by the government for May.

On Friday, the Labor Department will report on June’s nonfarm payrolls, which also include the public sector. Economists polled by MarketWatch are looking for a gain of 115,000 and for the nation’s unemployment rate to remain steady at 9.1%. See MarketWatch economic calendar.

This would be a pickup from the slow growth of 54,000 in nonfarm jobs added during May.

“A number like this, while it is just one month’s number, suggests that really maybe what happened [in May] was a pause in the economic expansion and that, as we head in summer months, we are going to pick up some momentum,” said Joel Prakken, chairman of Macroeconomic Advisers.

Job gains were a revised 36,000 in May, compared with the initial estimate of just 38,000, the ADP data also showed.

Still, the current labor market remains decidedly weak, and it will take much more than one strong month to move it into healthy territory and make a meaningful dent in the unemployment rate.

Over the past two years, there have been periods where it looked like some healing would take place only to see subsequent months prove disappointing.

Other indicators have shown continued tough times in the labor market.

On Wednesday, outplacement consultancy firm Challenger Gray & Christmas Inc. reported that planned layoffs were 41,432 in June, the second straight monthly rise.

In addition, jobless claims have topped the key 400,000 mark for 13 straight weeks after touching a three-year low of 375,000 in late February. When the U.S. economy creates lots of new jobs, new applications for unemployment benefits usually drop well below 400,000 for a prolonged period.

Shortly after the ADP data came out, the Labor Department reported a drop in first-time filings for unemployment benefits for the week ended July 2, to 418,000 from the prior week’s 432,000. Read ‘U.S. requests for jobless benefits decline’

Details
According to the ADP report, employment in the service-producing sector rose 130,000 in June, after a 46,000 gain in May, according to ADP.

Employment in the goods-producing sector rose 27,000 after a drop of 10,000 in the prior month.

Manufacturing employment rose by 24,000 in June after a 10,000 drop in the prior month.

In June, employment gained 88,000 among small-sized businesses, 59,000 among medium businesses and 10,000 among large businesses, according to ADP.

“There is a lot in this report that makes me feel better about the direction we are heading in now after last month’s pause,” Prakken said.