US Economy

US private sector jobs fall short in July

Private businesses add 185k jobs in July
Private businesses add 185k jobs in July
ADP July payrolls up 185,000
ADP July payrolls up 185,000
Economy can handle higher interest rates: Pro
Economy can handle higher interest rates: Pro

American companies added fewer jobs than expected last month, according to the latest ADP private payrolls report, dragged down by the struggling energy and nonvehicle manufacturing industries.

ADP said Wednesday U.S. private employers hired 185,000 workers in July—below the 215,000 analysts had expected and lower than the downwardly revised additions of 229,000 for June.

In a couple bright spots, the services sector added the lion's share of positions in July, while large businesses overall reported their best month of hiring since December, adding 64,000 positions.

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The ADP report came ahead of Friday's government employment report for July. Economists expect a gain of 223,000 nonfarm payrolls and the jobless rate holding steady at 5.3 percent, according to Reuters.

Investors are paying careful attention to the labor market and other key numbers for clues on whether the Federal Reserve will deem the economy strong enough to hike interest rates for the first time since 2006 at its September meeting.

"I think we've been in a 3 percent economy. I think that's where we've been for the past year," said Moody's Analytics Chief Economist Mark Zandi, who helps compile the ADP report.

Acknowledging the government numbers are not showing that strength yet, he told CNBC: "I think with all the revisions, Q2 will be 3 percent."

The first read on second-quarter gross domestic product from the Commerce Department last week showed a slightly slower-than-expected growth rate of 2.3 percent. First-quarter GDP was revised to a slight expansion from an earlier contraction.

—CNBC's Tom DiChristopher and Reuters contributed to this report.