Private Jobs Jump, Claims Fall as Labor Market Heals
Private companies hired 188,000 new workers in June, considerably better than expectations, indicating the job market continues to heal slowly, according to a report from ADP.
The number combined with a steadying of weekly jobless claims at 343,000, which was below estimates of 350,000 and consistent with recent weeks.
Services again stoked the private-hiring number, with 161,000 new jobs compared to the goods-producing sector's creation of 27,000 positions, the survey from ADP and Moody's Analytics showed.
Economists polled by Reuters estimated the report on U.S. private sector job growth would show payroll growth of 160,000 jobs for June, compared to last month's survey that showed 134,000.
The report sets the stage for Friday's nonfarm payrolls report from the government, which is expected to show 163,000 new jobs in the private and public sector combined.
Generally speaking, economists draw the line around 150,000 for the amount of jobs needed each month to keep pace with new entrants to the labor force.
"This would suggest that nothing has changed," Mark Zandi, Moody's economist, told CNBC. "The job market is still remarkably stable."
Though the ADP numbers have historically deviated from the official Labor Department count, the upside surprise could push economists into revising their forecasts higher.
"Our work has found the series to be the single best predictor of monthly changes in nonfarm payrolls," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a note. "If ADP surprises us meaningfully in either direction, we will adjust our payroll forecast accordingly."
LaVorgna had forecast a below-consensus 145,000 for the nonfarm payrolls report.
The details of the ADP report rang familiar: Small business set the tone by adding 84,000 jobs, while medium-sized gained 55,000 and large businesses hired 49,000.
Professional and businesses services comprised 40,000 of the total number, with trade, transportation and utilities contributing 43,000 and construction 21,000.
The jobless claims number, meanwhile, represented a decline of 5,000 from the previous week's revised 348,000.
The four-week moving average declined to 345,500, a drop of 750 from the previous week.
"The data...remains encouraging and leads us to conclude that job growth remains alive and kicking across the economy," said Andrew Wilkinson, chief market economist at Miller Tabak.
No states estimated claims and there did not appear to be any unusual factors influencing the weekly count.
In other economic news, exports unexpectedly fell 0.3 percent while imports rose 1.9 percent.