ADP Says U.S. Companies Added 176,000 Workers in June

ADP Says U.S. Companies Added 176,000 Workers in June
Job seekers attend the Veterans Affairs Job Fair in Detroit. Photographer: Jeff Kowalsky/Bloomberg

Companies in the U.S. added more workers than forecast in June, which may ease concern the labor market is deteriorating, a private payrolls report showed.

The 176,000 increase followed a revised 136,000 gain the prior month that was higher than initially estimated, according to figures released today by Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for a 100,000 advance.

A pickup in hiring that’s sustained will help generate the wage growth needed to spur consumer spending, which accounts for about 70 percent of the world’s largest economy. A Labor Department report due tomorrow may show that private payrolls accelerated in June from a month earlier, while the unemployment rate held at 8.2 percent, economists projected.

“The economy is weakening but we’re not falling off a cliff,” said Neil Dutta, head U.S. economist at Renaissance Macro Research LLC in New York. “You should see some employment growth but it won’t be enough to lower the unemployment rate in any meaningful way.”

Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, another report today showed. Applications for jobless benefits decreased 14,000 in the week ended June 30 to 374,000, the fewest since the middle of May, Labor Department figures showed.

Stock Futures

Stock-index futures trimmed losses after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September little changed at 1,367.8 at 8:35 a.m. in New York after falling as much as 0.4 percent.

Estimates of the 35 economists surveyed by Bloomberg ranged from gains of 50,000 to 150,000 in the ADP report. ADP’s initial figures for May showed a gain of 133,000, while the Labor Department said companies added 82,000 workers that month.

Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in April, when it understated the increase in jobs by 11,000. The estimate was least accurate in December, when it overstated the employment gain by 113,000.

Goods-producing industries, which include manufacturers and builders, added 16,000 workers in June, today’s ADP figures showed. Employment in construction increased by 8,000, while factories added 4,000 jobs.

Service Industry

Service providers increased employment by 160,000 workers.

Companies employing more than 499 workers took on 11,000 workers. Medium-sized businesses, with 50 to 499 employees, added 72,000 and small companies increased payrolls by 93,000, ADP said.

A Labor Department report due tomorrow may show that private payrolls rose by 100,000 in June and unemployment stayed at 8.2 percent, economists projected.

The ADP report is based on data from businesses with a total of more than 21 million workers on payrolls. Macroeconomic Advisers LLC in St. Louis produces the data with ADP.

Used-vehicle seller Carmax Inc. is among companies feeling the pinch of limited income growth and a jobless rate that’s exceeded 8 percent for 40 straight months.

“The weak economy and high unemployment rate continues to be a drag on the consumer,” Thomas Folliard, chief executive officer at CarMax, a Richmond, Virginia-based used-vehicle retailer, said on a conference call with analysts on June 21.

Consumer Spending

Bigger increases in employment that would help drive the wages gains are needed to power household purchases, which stalled in May. Spending was little changed in May after a 0.1 percent rise the prior month, Commerce Department figures showed last week.

“Certainly a stronger jobs market and a lower unemployment would be a nice shot in the arm for both of retail and delivery,” said Michael Miles, president and chief operating officer of Staples Inc., an office supply retailer based in Framingham, Massachusetts. Unemployment must fall to around 6 percent to trigger strong growth, he said. “I don’t think we’re waiting around and holding our breath for that in the retail space.”

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